Answer:
Dr. Employee Benefits expense $22,700
Cr. Medical Insurance payable $13,500
Cr. Employee retirement program payable $9,200
Explanation:
The cost of fringe benefit provided to the employee of the company and any tax component attached to it is known as the employee benefit expense.
Total employee benefit expense is the sum of medical insurance and employee retirement program. As medical insurance and retirement program is payable until now so, it is recorded as a liability.
Employee benefit expense = $13,500 + $9,200 = $22,700
Summer, Inc., (lessee) entered into an 8-year operating lease on January 1, Year 1. Annual lease payments begin December 31, Year 1. They are $55,000 for Years 1-7 with a final payment in Year 8 of $100,000. The rate implicit in the lease of 8% is known to Summer. The present value of 1 at 8% for 8 years is 0.540. The present value of an ordinary annuity at 8% for 8 years is 5.747. What is the amortization amount of the right-of-use asset in Year 1 for Summer, Inc.
The amortization amount of the right-of-use asset in Year 1 for Summer, Inc. is $25,142.80.
Explanation:The amortization amount of the right-of-use asset in Year 1 for Summer, Inc. can be calculated using the formula:
Amortization Amount = Lease Liability * Discount Rate
Lease Liability can be calculated by finding the present value of the lease payments:
Lease Liability = $55,000 * Present Value of an Ordinary Annuity at 8% for 7 years + $100,000 * Present Value of 1 at 8% for 8 years
Using the given present value factors, the lease liability can be calculated as:
Lease Liability = $55,000 * 5.747 + $100,000 * 0.540 = $314,285
Therefore, the amortization amount of the right-of-use asset in Year 1 would be:
Amortization Amount = $314,285 * 0.08 = $25,142.80
The normal selling price is $20 per unit. Wiacek capacity is 100,000 units per year. Wiacek has received a request for a special order of 5,000 units for $14 each. The special order would have no effect on Wiacek other sales. The customer would like modifications to the product that would increase direct material costs by $1.00 per unit. The order will not change Wiacek total fixed costs. If the order is accepted, by how much will annual profits increase
Answer:
annual profits will increase by $20,500
Explanation:
total relevant costs per unit:
direct materials $3.10additional direct materials $1.00direct labor $2.70variable manufacturing overhead $1.10variable selling and administrative expenses $2.00total $9.90additional profit generated by special order = (selling price - relevant costs) x number of units = ($14.00 - $9.90) x 5,000 units = $4.10 x 5,000 = $20,500
Since fixed costs are not affected by the special order, they should not be included in this analysis.
Crawford Company's standard fixed overhead rate is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows one direct labor hour per unit. Last year, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is Crawford's fixed overhead spending variance for last year
Answer:
Expenditure variance = $30,000 unfavorable
Explanation:
The fixed overhead spending variance is the amount by which the budgeted expenditure differs from the actual fixed overhead. Where the actual expenditure is less than the budgeted, the variance is favorable. An unfavorable variance implies the opposite.
$
Budgeted fixed overhead expenditure 600,000
Actual fixed overhead expenditure 630,000
Spending variance 30,000 Unfavorable
Final answer:
Crawford Company's fixed overhead spending variance for last year is $30,000. This unfavorable variance indicates that the actual fixed overhead costs were greater than the budgeted costs by this amount.
Explanation:
The fixed overhead spending variance for Crawford Company last year can be determined by comparing the budgeted fixed overhead costs to the actual fixed overhead costs incurred.
Based on the given standard fixed overhead rate of $6 per direct labor hour and the budgeted fixed costs of $600,000, the company would have expected to incur these fixed costs over 100,000 direct labor hours (since the standard allows one direct labor hour per unit and they produced 110,000 units).
However, the actual fixed overhead costs amounted to $630,000. To find the variance, we subtract the budgeted fixed overhead costs from the actual fixed overhead costs incurred: $630,000 (actual) - $600,000 (budgeted) = $30,000.
Therefore, Crawford's fixed overhead spending variance is $30,000 unfavorable because the actual costs exceeded the budgeted costs.
The balance in retained earnings at December 31, 2017 was $1,440,000 and at December 31, 2018 was $1,164,000. Net income for 2018 was $1,000,000. A stock dividend was declared and distributed which increased common stock $500,000 and paid-in capital $220,000. A cash dividend was declared and paid. Reference: Ref 23-4 The amount of the cash dividend was A. $496,000. B. $1,276,000. C. $556,000. D. $776,000.
Answer:
The correct answer is Option C.
Explanation:
Movement in retained earnings is as follows:
Balance, beginning of the year $1,440,000
Net income $1,000,000
Stock dividend declared and distributed ($720,000)
Cash dividend paid (XXXX)
Balance, end of the year $1,164,000
The cash dividend paid is a balancing figure and it is to be subtracted from the retained earnings. The amount is $556,000. That is, $1,164,000 - $1,720,000.
On March 1, 2018, Mandy Services issued a 3% long-term notes payable for $15,000. It is payable over a 3-year term in $5000 principal installments on March 1 of each year, beginning March 1, 2019. Each yearly installment will include both principal repayment of $5000 and interest payment for the preceding one-year period. What is the amount of total cash payment that Mandy will make on March 1, 2019?
Answer:
$5,450.
Explanation:
Payment of Interest expenses = $15,000 * 3% = $450
Principal repayment = $5,000
Total cash payment on March 1, 2019 = $5,000 + $450 = $5,450.
Therefore, the amount of total cash payment that Mandy will make on March 1, 2019 is $5,450.
The assumption(s) made to construct a kinked-demand oligopoly model is (are) that: A. all price changes made by any firm will be followed by all of the other firms. B. any price decrease will be ignored, but price increases will be followed. C. all firms in the industry will ignore the price changes made by any one firm. D. all firms will follow a price decrease but will ignore any price increase.
Answer:
The correct answer is A)
Explanation:
When there is a price increase by one of the oligopolists the others will reduce price in order to reduce the make the original company to that increased it's prices to lose market share.
When there is a price decrease others follow suit thus reducing the profit the "leadering company" would have made.
Cheers!
The assumption in constructing a kinked-demand oligopoly model is that firms will follow a price decrease but ignore any price increase, leading to a kinked demand curve that explains the price rigidity in oligopoly markets.
The assumption(s) made to construct a kinked-demand oligopoly model is that all firms will follow a price decrease but will ignore any price increase. This assumption stems from the observation that in an oligopoly setting, firms believe that while decreasing their prices may lead to a price war, increasing prices will result in losing customers to competitors who do not match the price increase. Therefore, a firm's demand curve is believed to be more elastic for price increases (where customers are more responsive to price changes) and less elastic for price decreases (where customers are less responsive because all firms match the price decrease).
Given this understanding, the correct option is D. all firms will follow a price decrease but will ignore any price increase. This behavior leads to a kinked demand curve, where the curve is steeper above the current price, assuming firms do not follow a price increase, and flatter below the current price, assuming firms match a price decrease. This model aims to explain why prices in oligopoly markets tend to be rigid and do not change as frequently as in more competitive markets.
Marcy Tucker received the following items this year. Determine to what extent each item is included in her AGI. (Leave no cells blank - be sure to enter "0" wherever required.) A $25,000 cash gift from her parents. A $500 cash award from the local Chamber of Commerce for her winning entry in a contest to name a new public park. $8,000 alimony from her former husband, which he paid under the terms of their 2011 divorce decree. $100,000 cash inheritance from her grandfather.
Answer: A. $0
B. $500
C. $8,000
D. $0
Explanation:
A. $0.
The $25,000 is a cash gift from her parents which is a cash gift from relatives and so is not included in the AGI.
B. $500
The entire amount is included in her AGI as winnings from competitions are included in AGI calculations.
C. $8,000
Alimony payments are included in AGI calculations so the whole alimony figure is to be included.
D. $0
Cash inheritance is not to be included in AGI calculations for tax purposes so the entire figure of $100,000 should not be included.
Marcy's AGI includes only the $500 cash award from the contest. Other sums such as alimony, cash gift, and inheritance are not taxable and thus not included.
Explanation:Marcy Tucker's Adjusted Gross Income (AGI) is calculated by determining the taxable part of all her received items. First of all, the $25,000 cash gift from her parents is not taxable and so is not included in AGI. Secondly, the $500 cash award she won from a contest is included in her AGI. Thirdly, the $8,000 alimony that she received is not included in her AGI as the divorce decree was before 2019. Lastly, the $100,000 cash inheritance that Marcy received from her grandfather is not taxable under IRS rules and is not included in her AGI.
Learn more about Adjusted Gross Income here:https://brainly.com/question/32825765
#SPJ3
Western Electric has 26,500 shares of common stock outstanding at a price per share of $68 and a rate of return of 13.55 percent. The firm has 6,750 shares of 6.70 percent preferred stock outstanding at a price of $89.50 per share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $371,000 and currently sells for 105.5 percent of face. The yield to maturity on the debt is 7.75 percent. What is the firm's weighted average cost of capital if the tax rate is 39 percent?
Answer:
11.12%
Explanation:
Computation of the given data are as follow:-
Value of Common Stock= 26,500 × $68 = $1,802,000
Value of Preferred Stock = 6,750 × $89.50 =$604,125
Outstanding Debt = Total Face Value of Debt × Current Sale Percent
= $371,000 × 105.5 ÷ 100 = $391,405
Total Value = Value of Common Stock + Value of Preferred Stock + Outstanding Debt
= $1,802,000 + $604,125 + $391,405
=$2,797,530
Weighted Average Cost of Capital (WACC) = (Common Stock ÷ Total Value) × Rate of Return of Common Stock + (Preferred Stock ÷ Total Value) × Fixed Dividend Rate of Preferred Stock × 100 ÷ Preferred Stock Price + (Outstanding Debt ÷ Total Value) × Yield of Maturity of Debt × (1 - Wacc Rate)
= ( $1,802,000 ÷ $2,797,530) × 0.136 + ($604,125$ ÷ $2,797,530) × 0.067 × 100 ÷ $89.50 + ($391,405 ÷ $2,797,530) × 0.0775 × (1 -.39)
= 0.088 + 0.0162 + 0.007
= 0.1112 or 11.12%
Milano Gallery purchases the copyright on an oil painting for $480,000 on January 1, 2017. The copyright legally protects its owner for 12 more years. The company plans to market and sell prints of the original for 19 years. Prepare entries to record the purchase of the copyright on January 1, 2017, and its annual amortization on December 31, 2017.
Answer:
Jan.1
Dr Copyright 480,000
Cr Cash 480,000
Dec.31
Dr Amortization Expense - Copyright 40,000
Cr Accumulated Amortization - Copyright 40,000
Explanation:
Milano Gallery Journal entry
Jan.1
Dr Copyright 480,000
Cr Cash 480,000
Dec.31
Dr Amortization Expense - Copyright 40,000
Cr Accumulated Amortization - Copyright 40,000
Amortization Expense of Copyright ($480,000 / 12 years)
=$40,000
Categorize each transaction according to the U.S. account to which it belongs and the direction the money flows. Account Direction of flow An Australian company buys steel from a U.S. firm. The Federal Reserve buys $2 billion worth of euros. Profits are earned by a U.S. based mining company operating in Mexico. An English company purchases a U.S. confectionary manufacturer.
Answer:
The answers are (1) Current account, payment from foreigners (2) Financial account, payment to foreigners (3) Current account, payment from foreigners (4) Financial account, payment from foreigners.
Explanation:
Solution
Now, when dollars enters from the rest of the world into the United States, this is a payment from foreigners, also when dollars flow form The United States to the rest of the world, this is a payment to foreigners.
The sale and purchase of goods and services is recorded or captured in a current account. the flow of capital is captured in a financial account. now from the analysis above the answers is given below:
(1) An Australian company buys steel from a U.S. firm.
Answer :Current account, payment from foreigners
(2) $2 billion euros worth is bought by the Federal Reserve
Answer : Financial account, payment to foreigners
(3) Profits are earned by a U.S. based mining company operating in Mexico.
Answer : Current account, payment from foreigners
(4) n English company purchases a U.S. confectionary manufacturer.
Answer: Financial account, payment from foreigners.
The transactions given are categorized below:
1. An Australian company buys steel from a US Firm.
Account: Current Account Direction of Flow: Payment to foreigners
2. The federal reserve buys $252 billion worth of euros.
Account: Financial Account. Direction of Flow: Payment to a foreigner.
3. Profit earned by a US based mining company operating in Mexico
Account: Current account. Direction of Flow: Payment from foreigners
4. An English company buy a US confectionery manufacturer.
Account: Financial Account Direction of Flow: Payment from Foreigners.Learn more about transactions on:
https://brainly.com/question/5005542
Maria Corporation purchased $720,000 of its bonds on June 30, 2020, at 103 and immediately retired them. The carrying value of the bonds on the retirement date was $675,000. The bonds pay annual interest and the interest payment due on June 30, 2020, has been made and recorded. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit June 30 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount Blue Spruce, Inc., purchased $352,000 of its bonds at 98 on June 30, 2020, and immediately retired them. The carrying value of the bonds on the retirement date was $350,000. The bonds pay annual interest and the interest payment due on June 30, 2020, has been made and recorded. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit June 30 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
Answer:
A.Maria Corporation Journal entry
June30
Dr Bonds Payable 675,000
Dr Loss on Bond Redemption 66,600
Cr Cash 741,600
B.Spruce, Inc. Journal entry
June30
Dr Bonds Payable 350,000
Dr Gain on Bond Redemption 5,040
Cr Cash 344,960
Explanation:
A. Maria Corporation Journal entry
June 30, 2020
Dr Bonds Payable 675,000
Dr Loss on Bond Redemption 66,600
Cr Cash 741,600
($720,000 × 103% )
B.Spruce, Inc. Journal entry
June 30, 2020
Dr Bonds Payable 350,000
Dr Gain on Bond Redemption 5,040
Cr Cash 344,960
($352,000 × 98%)
Answer:
First bond:
dr notes payable $720,000
dr loss on bond redemption $66,600
cr discount on notes payable $45,000
cr cash $741,600
second bond:
dr notes payable $350,000
cr premium on bonds payable $2,000
cr cash $343,000
cr gain on bond redemption $5,000
Explanation:
The discount balance outstanding on the first bond is the face value of $720,000 minus the carrying value of $675,000,i.e $45,000($720,000-$675,000).
The amount of cash paid on redemption is $720,000*103%=$741,600
The outstanding premium on the second is $2,000($352,000-$350,000)
The amount of cash paid was $343,000( $350,000*98%)
ecord adjusting journal entries for each of the following for year ended December 31. Assume no other adjusting entries are made during the year. Salaries Payable. At year-end, salaries expense of $18,500 has been incurred by the company, but is not yet paid to employees. Interest Payable. At its December 31 year-end, the company owes $400 of interest on a line-of-credit loan. That interest will not be
Answer: Please Refer to Explanation
Explanation:
Please see complete question attached to this answer.
A.
As the company has not paid the salary but they recognize it is an expense, it should be credited to Salaries payable from the salary expense account.
DR Salary Expense $ 18,500
CR Salary Payable $18,500
( To record Salary Expense incurred but not paid)
B.
As the company has not paid the interest but they recognize it is an expense, it should be credited to Interest Payable from the interest expense account until it is paid.
DR Interest Expense $400
CR Interest Payable $400
( To record interest expense on loan not paid )
C.
As the company has not paid the mortgage interest but they recognize it is an expense, it should be credited to mortgage payable from the mortgage account expense account
DR Mortgage Interest Expense $1,025
CR Mortgage Interest Payable $1,025
( To recording interest expense on mortgage not paid for the year).
A firm produces output using capital and labor. The firm's marginal product of labor (MP Subscript Upper L) is 40 and its marginal product of capital (MP Subscript Upper K) is 28. Suppose the wage per unit of labor (w) is $6.00 and the cost per unit of capital (r) is $3.00. Is the firm minimizing the cost of production? What should the firm do, if anything, to produce the same level of output at lower cost? The firm
Answer:
a. No, the firm is not minimizing the cost of production.
b. The firm should continue to increase the units of labor by reducing the unit of capital until when the ratio of Marginal product of labor to Marginal product of capital of is equal to the ratio of w to r.
Explanation:
a. Is the firm minimizing the cost of production?
The firm minimizing the cost of production where:
Marginal product of labor / Marginal product of capital = w / r
From the question, we have:
40 / 28 = 6 / 3
1.43 = 2
Since the ratio of Marginal product of labor to Marginal product of capital of 1.43 is not equal to the ratio of w to r, the firm is not minimizing the cost of production.
b. What should the firm do, if anything, to produce the same level of output at lower cost?
The firm should continue to increase the units of labor by reducing the unit of capital until when the ratio of Marginal product of labor to Marginal product of capital of is equal to the ratio of w to r.
The closest point at which this will happen is when the Marginal product of labor is 45 and Marginal product of capital is 23 where we have:
45 / 23 = 1.96, or 2 approximately.
The firm is not minimizing the cost of production, since the ratios of marginal product to input cost for labor and capital are not equal. To minimize cost, the firm should employ more labor and less capital.
Explanation:Cost minimization in a production process requires that the ratio of the marginal product of labor to the wage (MP Subscript Upper L/w) is equal to the ratio of the marginal product of capital to the cost of capital (MP Subscript Upper K/r). In this case, the given MP Subscript Upper L is 40 and the wage is $6.00, giving a ratio of 40/6 = 6.67. Meanwhile, the MP Subscript Upper K is 28 and the cost of capital is $3.00, giving a ratio of 28/3 = 9.33.
Since the two ratios are not equal, the firm is not minimizing the cost of production. To lower costs, the firm should employ more of the input that is relatively cheaper per unit of marginal product- in this case, labor- and less of the input that is relatively more expensive per unit of marginal product- here, capital. This adjustment allows the firm to produce the same level of output at a lower cost.
Learn more about Cost Minimization here:https://brainly.com/question/34534719
#SPJ11
"Pepe, Incorporated acquired 60% of Devin Company on January 1, 2018. On that date, Devin sold equipment to Pep for $45,000. On the sale date, the equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 for 2018. Pep uses the equity method to account for its investment in Devin. What is the amount of income from investment in Devin for 2018
Answer:
Amount of income from investment in Devin for 2018 = $184,800
Explanation:
As per the data given in the question,
Net income for 2018 = $300,000
Loss on sale of equipment = ($120,000 - $66,000 -$45,000)
= $9,000
Difference in depreciation = ($120,000 - $66,000) ÷ 9 - $45,000 ÷ 9
= $1,000
Total income = $300,000 + $9,000 - $1,000
= $308,000
Amount of income from investment in Devin for 2018 = $308,000 × 60%
= $184,800
Ehrling, Inc., manufactures metal racks for hanging clothing in retail stores. Ehrling was approached by the CEO of Carly’s Corner, a regional nonprofit food bank, with an offer to buy 350 heavy-duty metal racks for storing canned goods and dry food products. While racks normally sell for $245 each, Carly’s Corner offered $75 per rack. The CEO explained that the number of families they served had grown significantly over the past two years, and that the charity needed additional storage for the donated food items. Since Ehrling is operating at 80 percent of capacity, and Ehrling employees have "adopted" Carly’s Corner as their annual charity, the company wants to make the special order work. Ehrling’s controller looked into the cost of the storage racks using the following information from the activity-based accounting system:
Activity Rate**
Activity Driver Unused
Capacity Quantity
Demanded* Fixed Variable
Direct materials Number of racks 0 350 - $82
Direct labor Direct labor hours 0 525 - 15
Setups Setup hours 60 1 $150 5
Inspection Inspection hours 800 20 10 5
Machining Machine hours 6,000 175 40 3
*This represents only the amount of resources demanded by the special order being considered.
**This is expected activity cost divided by activity capacity.
Expansion of activity capacity for setups, inspection, and machining must be done in steps. For setups, each step provides an additional 20 hours of setup activity and costs $3,000. For inspection, activity capacity is expanded by 2,000 hours per year, and the cost is $20,000 per year (the salary for an additional inspector). Machine capacity can be leased for a year at a rate of $40 per machine hour. Machine capacity must be acquired, however, in steps of 1,500 machine hours.
Required:
1. Compute the change in income for Ehrling, Inc., if the order is accepted.
$
2. Suppose that the packing activity can be eliminated for this order since the customer is in town and does not need to have the racks boxed and shipped. Because of this, direct materials can be reduced by $13 per unit, and direct labor can be reduced by 0.5 hour per unit. How is the analysis affected?
It is now a $_____ loss if the special order is accepted.
Answer:
additional revenue = $26,250
relevant costs:
direct materials =350 x $82 = $28,700
direct labor = 525 x $15 = $7,875
setup hours = 1 x $5 = $5
inspection costs = 20 x $5 = $100
machining = 175 x $3 = $525
total relevant costs = $37,205
1) change in income if order is accepted:
total revenue - total relevant costs = $26,250 - $37,205 = -$10,955
the company will incur in $10,955 in losses if order is accepted.
2) if direct materials are reduced by $13 per unit = $13 x 350 = $4,550, and direct labor costs can be reduced by 0.5 x 350 = 175 hours (= 175 x $15 = $2,625) ⇒ total relevant costs will decrease by $7,175.
It is now a $3,780 (= $10,955 - $7,175) loss if the special order is accepted.
1) If the order is accepted by the company then the income will fall by $10,955.
2) if the special order is accepted then there will be a loss of $3,780 only.
Computation:
1) The table is attached below in the image.
2)
If the direct material are reduced by $13 per unit then the total reduction would be $4,550 for 350 units.
if the direct labor is reduced by 0.5 hour per unit then the total reduction will be of 175 hours and the amount will be $2,625.
The cumulative of both the amount will reduce the total revenue by $7,175.
Thus, if the special order is accepted then the net reduction in the net income of the company will be the difference of total revenue less the additional reduction.
To know more about activity based costing system, refer to the link:
https://brainly.com/question/14347199
Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 20 units at $360 $7,200 Aug. 13 Purchase 260 units at $342 88,920 Nov. 30 Purchase 40 units at $357 14,280 Available for sale 320 units $110,400 There are 57 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method. a. First-in, first-out (FIFO) method $ b. Last-in, first-out (LIFO) method $ c. Weighted average cost method $
Answer:
FIFO = $20,094.00
LIFO = $19,854.00
Weighted average cost = $19,665.00
Explanation:
a. The computation of first-in, first-out (FIFO) method is shown below:-
Details Units Cost Per Unit Total Cost
Jan-01 Opening
Inventory 20.00 $360.00 $7,200.00
Aug-13 Purchase 260.00 $342.00 $88,920.00
Nov-13 Purchase 40.00 $357.00 $14,280.00
Sales 303.00
Dec-13 Closing Stock
Aug-13 Lot 17.00 $342.00 $5,814.00
Dec-13 Closing Stock
Nov-13 Lot 40.00 $357.00 $14,280.00
Total Closing Stock Valuation under FIFO $20,094.00
b. The computation of last-in, first-out (LIFO) method is shown below:-
Details Units Cost Per Unit Total Cost
Jan-01 Opening
Inventory 20.00 $360.00 $7,200.00
Aug-13 Purchase 260.00 $342.00 $88,920.00
Nov-13 Purchase 40.00 $357.00 $14,280.00
Sales $283.00
Dec-13 Closing Stock
Aug-13 Lot 37.00 $342.00 $12,654.00
Dec-13 Closing Stock
Jan-01 Lot 20.00 $360.00 $7,200.00
Total Closing Stock Valuation under LIFO $19,854.00
c. The computation of Weighted average cost method is shown below:-
Details Units Cost Per Unit Total Cost
Jan-01 Opening
Inventory 20.00 $360.00 $7,200.00
Aug-13 Purchase 260.00 $342.00 $88,920.00
Nov-13 Purchase 40.00 $357.00 $14,280.00
Weighted
Average Cost 320.00 $345.00 $1,10,400.00
Sales $283.00
Dec-13 Closing Stock
Aug-13 Lot 57.00 $345.00 $19,665.00
Final answer:
Inventory cost calculations differ based on the accounting method used: FIFO sums the oldest unit costs for remaining inventory, LIFO uses the most recent costs, and the weighted average cost method takes the average cost of all available units.
Explanation:
To calculate the inventory cost using the first-in, first-out (FIFO) method, we consider the oldest costs first for the remaining inventory. With 57 units in the physical inventory at December 31, we take all 20 units from Jan. 1 at $360 and 37 units from the Aug. 13 purchase at $342, which totals to $7,200 + (37 units ×$342) = $19,854.
Using the last-in, first-out (LIFO) method, we start with the most recent costs. This means taking all 40 units from the Nov. 30 purchase at $357 and 17 units from the Aug. 13 purchase at $342, resulting in (40 units ×$357) + (17 units ×$342) = $20,334.
For the weighted average cost method, we divide the total cost of all units available by the number of units available to find the average cost per unit, which is $110,400 / 320 units = $345 per unit. Therefore, the cost of the ending inventory is 57 units ×$345 = $19,665.
On January 2, 2021, Sunland Company issued at par $9900 of 5% bonds convertible in total into 1000 shares of Sunland's common stock. No bonds were converted during 2021. Throughout 2021, Sunland had 1000 shares of common stock outstanding. Sunland's 2021 net income was $4500, and its income tax rate is 25%. No potentially dilutive securities other than the convertible bonds were outstanding during 2021.
Sunland's diluted earnings per share for 2021 would be (rounded to the nearest penny) _____.
Answer:
$2.44 per share
Explanation:
The computation of diluted earnings per share is shown below:-
Savings in interest if bonds are converted net of tax
= (9900 × 0.05) × (1 - 0.25)
$495 × 0.75
= $371.25
If bonds are converted the total earnings = $4,500 + $371.25
= $4,871.25
Total shares outstanding = 1,000 + 1,000
= 2,000
Diluted Earning per share = Total earning ÷ Total shares outstanding
= $4871.25 ÷ 2,000
= $2.44 per share
So, for computing the diluted earning per share we simply divide total earnings by total shares outstanding.
Moreno Company purchased equipment for $900,000 on January 1, 2017, and will use the double-declining-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $40,000 salvage value at the end of its useful life. The amount of depreciation expense recognized in the year 2019 will be
a.$100,000.
b.$60,000.
c.$108,880.
Answer:
b.$60,000.
Explanation:
First we have to find the depreciation rate which is shown below:
= One ÷ useful life
= 1 ÷ 3
= 33.33%
Now the rate is double So, 66.66%
In year 1, the original cost is $900,000, so the depreciation is $600,000 after applying the 66.66% depreciation rate
And, in year 2, the $200,000 ($900,000 - $600,000) × 66.66%
And, in year 3 it is ($100,000 - $40,000) = $60,000
The $100,000 is come from
= $900,000 - $600,000 - $200,000
= $100,000
The depreciation expense for the year 2019 using the double-declining balance method for Moreno Company's equipment is $0, as the book value has reached the salvage value in the previous year.
Explanation:The question is asking to calculate the depreciation expense for the year 2019 using the double-declining-balance method for a piece of equipment. To compute the depreciation expense for 2019, we start by calculating the annual depreciation rate. Given a 3-year life, the straight-line depreciation rate would be 1/3 (or 33.33%), but since we are using the double-declining-balance method, we double that rate to get 66.66%. We apply this rate to the book value at the beginning of each year minus the salvage value.
First-year depreciation (2017): $900,000 * 66.66% = $600,000
After the first year, the book value is $900,000 - $600,000 = $300,000
Second-year depreciation (2018): $300,000 * 66.66% = $200,000 (but capped to reduce to salvage value, hence $260,000)
The book value at the beginning of 2019 is $40,000 (salvage value).
Considering the salvage value has been reached, we cannot depreciate the asset further. Therefore, the depreciation expense for 2019 is $0. None of the provided options (a. $100,000, b. $60,000, c. $108,880) are correct.
The bookkeeper prepared a check for $68 but accidentally recorded it as $86. When preparing the bank reconciliation, this should be corrected by:
A. Adding $18 to the bank balance
B. Adding $18 to the book balance
C. Subtracting $18 from the bank balance
D. Subtracting $18 from the book balance.
Answer:
B. Adding $18 to the book balance
Explanation:
Because the bookkeeper accidentally reduced the book balance in $18 by recording the check payment for $86 instead of the actual $68, this mistake can simply be corrected by adding those $18 back to the book balance when making the bank reconciliation.
Compare and contrast the activities involved in strategy formulation and those in strategy implementation?
Answer:
In simple words, Strategy Formulation includes placing all powers in position until an operation actually occurs whereas Strategy Execution relies on handling certain forces throughout performance.
Strategy Formulation can be interpreted conceptual method while Execution of Strategy is an administrative process. Formulation of the plan involves cognitive competencies.
Sage Inc. owns shares of Pronghorn Corporation stock. At December 31, 2020, the securities were carried in Sage’s accounting records at their cost of $1,030,000, which equals their fair value. On September 21, 2021, when the fair value of the securities was $1,397,000, Sage declared a property dividend whereby the Pronghorn securities are to be distributed on October 23, 2021, to stockholders of record on October 8, 2021.
Prepare all journal entries necessary on those three dates.
Answer:
The Journal entry was recorded for Sage Inc, in the explanation section below
Explanation:
Journal Entries
Date Account Title and Debit $ Credit $
Explanation
21st Sept-21 Equity Investments
( $1,397,000- $1,030,000,) $367,000
To unrealized holding gain
or loss $367,000
21st Sept-21 The retained earnings $1,397,000
To Property Dividends payable $1,397,000
08- Oct-21 No entry
23- Oct-21 Property Dividends payable $1,397,000
To Equity Investments $1,397,000
Olive Corporation has two divisions, Pressing and Extracting. The company's primary product is Lavender Oil. Each division's costs are provided below: Extracting: Variable costs per barrel of oil $ 9 Fixed costs per barrel of oil $ 6 Pressing: Variable costs per barrel of oil $28 Fixed costs per barrel of oil $32 The Pressing Division sells the 200 barrels at a price of $150 each to customers. What is the operating income of both divisions together
Answer:
$15,000
Explanation:
Operating income is the difference between the net sales or revenue generated by a business and the operating expenses of the business.
The operating expenses of the business may be classified into 2 groups namely the fixed and variable costs.
The total operating cost of the business
= ( $9 + $6 + $28 + $32) per barrel
= $75
operating income of both divisions
= 200 ( $150 - $75)
= 200 * $75
= $15,000
The managers of a pension fund have invested $2.5 million in U.S. government certificates of deposit (CDs) that pay interest at the rate of 2.1%/year compounded semiannually over a period of 20 years. At the end of this period, how much will the investment be worth? (Round your answer to four decimal places.)
Answer:
The answer is $3.8 million
Explanation:
The payment is semiannual i.e it will be paid twice in a year.
Present value(PV) = $2.5 million
Interest rate = 1.05%(2.1% ÷ 2)
Number of periods = 40 years(20 years x 2)
The formula is FV = PV(1 + r)^n
= $2.5 million(1 + 0.0105)^40
= $2.5 million(1.0105)^40
= $2.5 million x 1.5186
= $3.8 million
The Investment will therefore worth $3.8 million at the end of the period.
Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,235,000. Harding paid $280,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $296,000; Building, $880,000 and Equipment, $584,000. What value will be recorded for the building
Answer:
The value recorded for the building = $140,000
Explanation:
From the appraisal of the property, the following information is given:
Value of land = $296,000
Value of building = $880,000
value of equipment = $584,000
Total = 296,000 + 880,000 + 584,000 = $1,760,000
Next, we will calculate the percentage of the total value allocated to the building as follows:
Percentage allocated to building = (value of building ÷ total value) × 100
= (880,000 ÷ 1,760,000) × 100
= 0.5 × 100 = 50%
Next, since we now know that the building takes 50% of the property cost, and since $280,000 was paid, the value recorded for building will be 50% of the $280,000 paid, and this is calculated as follows:
value recorded for building = 50% of 280,000
= 50/100 × 280,000 = 0.5 × 280,000 = $140,000
Harold Manufacturing produces denim clothing. This year, it produced 5,220 denim jackets at a manufacturing cost of $42.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets.
1) Jackets can be sold to a secondhand clothing shop for $7.00 each.
2) Jackets can be disassembled at a cost of $32,700 and sold to a recycler for $12.00 each.
3) Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,220 jackets into only 2,970 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $101,900, but the jackets can then be sold for their regular price of $44.00 each.
Required:
Calculate the incremental income.
Answer:
First option has incremental income of $36,540
The second option has incremental income of $29,940
The third option has incremental income of $28,780
Explanation:
Incremental income=incremental revenue-incremental cost
Option 1
Incremental revenue=5,220*$7=$36,540
incremental cost is $0
incremental income=$36,540 -$0=$36,540
Option 2:
Incremental revenue=$12*5,220=$62,640
Incremental cost =$32,700
incremental income=$62,640-$32,700=$ 29,940
Option 3:
Incremental revenue=$44*2970 =$ 130,680.00
Incremental cost=$101,900
incremental income= 130,680-$101,900=$28,780
Judging from the incremental income perspective,the first option seems to the best of all three options because it has the highest incremental income od $36,450
The traceable fixed administrative cost was incurred at the Alabama plant; in contrast, the allocated administrative cost represents a "fair share" of Deltones' corporate overhead. Alabama has been presented with a special order of 5,000 units of item no. 89 on which no selling cost will be incurred. The proper relevant cost in deciding whether to accept this special order would be:
Answer:
40
Explanation:
The computation of the relevant cost while accepting the special order is shown below:
= Fixed manufacturing + Variable selling + Fixed selling + Traceable fixed administrative + Allocated administrative
= 15 + 8 + 11 + 4 + 2
= 40
We simply added the all the cost which are shown above so that the relevant cost per unit could come
Final answer:
The average fixed cost is calculated by dividing total fixed costs by the number of units produced, which helps in understanding the concept of 'spreading the overhead'. The average fixed cost curve typically shows a downward trend as output increases, indicating that per unit cost decreases with larger production volumes.
Explanation:
Fixed costs, or overhead, are expenses that do not change with the level of production output. These costs are incurred regardless of the company's activity level. A typical example would be rent for the use of a factory.
To understand the impact of fixed costs on unit costs, we calculate the average fixed cost by dividing the total fixed cost by the number of units produced. For instance, if a company has a fixed cost of $1,000 and it produces 500 units, the average fixed cost per unit would be $2.00 ($1,000 / 500). As production increases, the average fixed cost per unit decreases because the fixed cost is spread over a greater number of units.
This concept is what is referred to as spreading the overhead. The average fixed cost curve typically shows a downward trend as production volume increases, depicting how fixed costs per unit fall as more units are produced. This is important for companies to understand as it impacts pricing and profitability, especially in the context of accepting special orders or calculating the relevance of costs for decision-making purposes.
BC Corporation has 2.8 million shares of stock outstanding. The stock currently sells for $50 per share. The firm’s debt is publically traded and was recently quoted at 95 percent of its face value. It has a total face value of $10 million, and it is currently priced to yield 12 percent. The risk-free rate is 5 percent, and the market risk premium is 7 percent. You’ve estimated that ABC has a beta of 1.25. If the corporate tax rate is 35 percent, what is the WACC of ABC Corporation?
Answer:
The WACC is 13.37%
Explanation:
The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital structure is made up of debt, preferred stock and common stock. In this question, there are only two components present in the capital structure i.e. debt and common stock.
The formula for WACC is,
WACC = wD * rD * (1 - tax rate) + wE * rE
Where,
w represents the weight of each component in the capital structure or value of each component as a proportion of total assetsr represents the cost of each componentwe take after tax cost of debt. So we multiply cost of debt by (1 - tax rate)We first need to determine the cost of equity using the CAPM,
rE = 0.05 + 1.25 * 0.07 = 0.1375 or 13.75%
We know that assets = debt + equity
Assets = (0.95 * 10) + (2.8 * 50)
Assets = 9.5 + 140
Assets = 149.5 million
The WACC for ABC is:
WACC = 9.5/149.5 * 0.12 * (1 - 0.35) + 140/149.5 * 0.1375
WACC = 0.1337 or 13.37%
Stuchlik Catering uses two measures of activity, jobs and meals, in the cost formulas in its budget and performance reports. The cost formula for catering supplies is $430 per month plus $80 per job plus $14 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in January to be 20 jobs and 190 meals, but the actual activity was 21 jobs and 194 meals. The actual cost for catering supplies in January was $4,850. The catering supplies in the planning budget for January would be closest to:
a. $4,850
b. $4,690
c. $4,826
d. $4,619
Answer:
Total cost= $4,690
Explanation:
Giving the following information:
Fixed costs= $430
Cost per job= $80
Cost per meal= $14
The company expected its activity in January to be 20 jobs and 190 meals.
The cost that would appear in the planned budget is calculated using the estimated activity.
Total cost= 430 + 80*20 + 14*190
Total cost= $4,690
Garden World uses the retail method to estimate its monthly cost of goods sold and month-end inventory. At May 31, the accounting records indicate the cost of goods available for sale during the month (beginning inventory plus purchases) totaled $500,000. These goods had been priced for resale at $860,000. Sales in May totaled $420,000. The estimated inventory at May 31 is:
Answer:
$255,815
Explanation:
Resale at $860,000
Less Sales May totaled $420,000
Total $440,000
cost of goods available for sale totaled $500,000÷Resale at $860,000
=0.58139
Hence:
$440,000×0.58139
=$255,815
Therefore the estimated inventory at May 31 is: $255,815
Revenues that are legally restricted for expenditure on specified operating purposes should be accounted for in special revenue funds, including Multiple Choice Pension trust fund revenues. Gasoline taxes to finance road repairs. Endowment where the investment earnings are to be used for public purposes. Accumulation of resources for payment of general long-term debt principal and interest.
Answer:
Revenues that are legally restricted for expenditure on specified operating purposes should be accounted for in special revenue funds including
Pension trust fund revenuesEndowment where the investment earnings are to be used for public purposes. Accumulation of resources for payment of general long-term debt principal and interest.Explanation:
There are two main reasons for restricting funds legally. It is either for use to accomplish a specific program or to be appropriated at a time in the future.
Pensions are designated to be paid out to the recipients in the future. To achieve these, a certain percentage of their earnings is legally restricted and accounted for in Pension Trust Fund revenues.
Endowment funds is predominant in NGOs where the investment earnings are to be used for public purposes.
Relevant financial institutions can work mutually with a company to accumulate resources for payment of general long-term debt principal and interest.
Final answer:
Special revenue funds are used to account for revenues that are restricted by law for specific operating purposes, such as gasoline taxes for road repairs. These restrictions ensure that the funds are spent precisely for their intended projects, providing transparency and accountability.
Explanation:
Revenues that are legally restricted for expenditure on specified operating purposes should be accounted for in special revenue funds. An example of this would be gasoline taxes to finance road repairs. This is because the tax revenue generated from gasoline sales is designated specifically for the improvement and maintenance of highways and roads.
In the context of public finance management, certain revenues are earmarked and can only be used for specific projects or objectives, as implied by terms such as 'legally restricted' and 'specified operating purposes'. These funds are strictly regulated to ensure that the resources are utilized only for their intended purposes according to legal or contractual requirements.
Other types of funds include the general fund, dedicated general funds, federal funds, and others such as the State Highway Fund, Texas Mobility Fund, and Property Tax Relief Fund, each with its own specified use. When funds are dedicated for a particular use, they provide transparency and accountability, ensuring that taxpayers can see how these funds are being managed and spent.