Answer:
b. countries can become better off by specializing in what they do best.
Explanation:
Comparative advantage in economics is the ability of an individual or country to produce a specific good or service at a lower opportunity cost better than another individual or country.
The comparative advantage gives a country a stronger sales margin than their competitors as they are able to sell their specific products or render their peculiar services at a lower opportunity cost.
In 1817, David Ricardo who is an english political economist talked about the law of comparative advantage in his book “On the Principles of Political Economy and Taxation."
Also, the principle of comparative advantage asserts that countries can become better off by specializing in what they do best.
This simply means that, any country applying the principle of comparative advantage, would enjoy an increase in output and consequently, a boost in their Gross Domestic Products (GDP).
Bulluck Corporation makes a product with the following standard costs: Standard Quantity or HoursStandard Price or Rate Direct materials 5.20grams$2.70per gram Direct labor 0.70hours$28.00per hour Variable overhead 0.70hours$3.70per hour The company reported the following results concerning this product in July. Actual output 4,700units Raw materials used in production 13,070grams Actual direct labor-hours 3,060hours Purchases of raw materials 13,800grams Actual price of raw materials purchased$2.90per gram Actual direct labor rate$13.10per hour Actual variable overhead rate$3.80per hour The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for July is:
Answer:
Efficiency variance = $851 favorable
Explanation:
Variable overhead efficiency variance: A variance is the difference between a standard cost and the actual cost. Variable overhead efficiency variance aims to determine whether or not their exist savings or extra cost incurred on variable overhead as a result of workers being faster or slower that expected.
Since the variable overhead is charged using labour hours, any amount by which the actual labour hours differ from the standard allowable hours would result in a variance
To calculate this variance, we do as follows:
Hours
4,700 should have taken(4,700 × 0.70 hrs) 3,290
but did take (i.e actual hours) 480 3,060
Efficiency variance in hours 70 unfavorable 230 favourable
Standard variable overhead rate × $3.70
Efficiency variance 851
Efficiency variance = $851 favorable
The town of Podunk is considering building a new downtown parking lot. The land will cost $25,000 and the construction cost of the lot is estimated to be $150,000. Each year costs associated with the lot are estimated to be $17,500. The income from the lot is estimated to be $18,000 the first year and increase by $3,500 each year for the twelve year expected life of the lot. Determine the B/C ratio if Podunk uses a cost of money of 4%.
Answer:
The B/C ratio if Podunk uses a cost of money of 4% is 0.99
Explanation:
In order to calculate the B/C ratio if Podunk uses a cost of money of 4%, we would have to use the following formula:
B/C ratio = PW BENEFITS / PWCOSTS
PW BENEFITS = $18,000 (P/A, 4%,12) + $3,500(P/G, 4%, 12) = $334,298
PW COSTS = $175,000 + $17,500(P/A. 4%,12) = $339,238
Therefore, B/C ratio = $334,298 / $339,238
B/C ratio = 0.99
Answer:
The B/C ratio if Podunk uses a cost of money of 4% is going to be $ 0.99
Explanation:
Base on the scenario been described in the question, we can be able to use the following formula in calculation of the B/C ratio if Podunk uses a cost of money.
B/C ratio = Benefits of PW/ Costs of PW
Substituting the values we have ;
Benefits of PW = $18,000 (P/A, 4%,12) + $3,500(P/G, 4%, 12)
Benefits of PW = $334,298
Costs of PW = $175,000 + $17,500(P/A. 4%,12)
Costs of PW = $339,238
B/C ratio = Benefits of PW/ Costs of PW
B/C ratio = $334,298 / $339,238
B/C ratio = $0.99
You will receive annual payments of $20,000 to be paid at the end of each of the next 4 years. The appropriate discount rate is 15% What is the present value of the payments? Future Value of 1 (15%, 4 periods) = 1.74901 Future Value of an Annuity of 1 (15%, 4 periods) = 4.99338 Present Value of 1 (15%, 4 periods) = 0.57175 Present Value of an Annuity of 1 (15%, 4 periods) = 2.85498 Group of answer choices $57,099.60 $80,000.00 $31,470.30 $72,095.60
Answer:
Present Value = $57,099.57
Explanation:
The Present Value of a series of future equal amount is the amount the sum in today's terms that would make one to be indifferent . It is the future series of cash flows discounted at the opportunity cost rate of return.
Present Value = A × ( 1-(1+r)^(-n))/r
A- annual cash flow- 20,000, r- discount rate - 15%, n number of years- 4
PV = 20,000 × (1- 1.15^(-4))/0.15
= 20,000 × 2.85498
= $57,099.57
Pretzelmania, Inc., issues 7%, 10-year bonds with a face amount of $64,000 for $64,000 on January 1, 2021. The market interest rate for bonds of similar risk and maturity is 7%. Interest is paid annually on December 31. Required: 1. & 2. Record the bond issue and first interest payment on December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer and Explanation:
The Journal entries is shown below:-
The Journal entry to record the bond issue is here below:-
January 1, 2021
Cash Dr, $64,000
To Bonds payable $64,000
(Being issue of bonds is recorded)
The Journal entry to record the interest payment is shown below:-
December 31, 2021
Interest Expenses Dr, $2,240
($64,000 × 7% × 6 ÷ 12)
To Cash $2,240
(Being interest payment of bond is recorded)
Wolfpack Company uses job-order costing. At the end of the month, the following data was gathered: Job # Total Cost Complete? Sold? 803 $611 yes yes 804 423 yes no 805 805 no no 806 682 yes yes 807 525 yes no 808 250 no no 809 440 yes yes 810 773 yes no 811 267 no no 812 341 no no Wolfpack’s selling price is cost plus 50% for each of its jobs. What is the selling price of Job 806?
Answer:
$1,023
Explanation:
The computation of the selling price of Job 806 is given below:-
Total cost of JOB 806 = $682
Selling price of the cost = 100 + 50
= 150%
Selling price = Total cost of JOB 806 × Selling price of the cost Percentage
= $682 × 150%
= $1,023
Therefore for computing the selling price we simply multiply the total cost of JOB 806 with selling price of the cost percentage.
Coronado Industries has 4760000 shares of common stock outstanding on December 31, 2020. An additional 198000 shares are issued on April 1, 2021, and 477000 more on September 1. On October 1, Coronado issued $6050000 of 8% convertible bonds. Each $1,000 bond is convertible into 40 shares of common stock. No bonds have been converted. The number of shares to be used in computing basic earnings per share and diluted earnings per share on December 31, 2021 is
Answer:
BEPS Shares = 5,067,500
DEPS Shares = 5,309,500
Explanation:
Basic Earnings per Share (BEPS) = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Shares.
Weighted Average Number of Common Shares
Outstanding Common Shares 4,760,000
Additional Shares: April( 9/12 × 198000) 148,500
Additional Shares: April( 4/12 × 477000) 159,000
Total Weighted Average Number of Common Shares 5,067,500
Diluted Earnings per Share (DEPS) =Adjusted Earnings Attributable to Holders of Common Stock /Adjusted Weighted Average Number of Common Shares.
Adjusted Weighted Average Number of Common Shares
Basic Earnings per Share Common Shares 5,067,500
Convertible Bonds ($6,050,000/$1,000 × 40) 242,000
Total Weighted Average Number of Common Shares 5,309,500
On January 1, 2017, Shay issues $330,000 of 12%, 15-year bonds at a price of 97.00. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104.50. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount. 7. Prepare the journal entry to record the bond retirement at January 1, 2023.
Answer and Explanation:
As per the data given in the question, Journal entries are as follows:
Jan 1
Bonds payable A/C Dr. $66,000
Loss on bonds' redemption A/c Dr. $4,158
To Discount on bonds payable A/c $1,188
($5,940*20%)
To Cash A/c $68,970
($66,000*104.5%)
(To record retirements of bonds before maturity)
Computation
Discount on bonds = $330,000 × 3% = $9,900
Amortized bond discount = $9,900 ÷ 15 × 6
= $3,960
Unamortized bond discount = $9,900 - $3,960
= $5,940
Face value of bonds retired = $330,000 × 20%
= $66,000
Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $3.20 and total fixed costs are $10,000. The cat food can be sold as it is for $8.55 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,600 cost. The additional processing will yield 10,000 bags of Premium Green and 3,600 bags of Green Deluxe, which can be sold for $7.55 and $5.55 per bag, respectively. If Green Health is processed further into Premium Green and Green Deluxe, the total gross profit would be:
Answer: $92,880
Explanation:
The Gross Profit can be calculated by simply removing the cost from the sales amount.
It is stated that the additional processing will yield 10,000 bags of Premium Green and 3,600 bags of Green Deluxe, which can be sold for $7.55 and $5.55 per bag.
Sales figure is therefore,
= (10,000 * 7.55) + (3,600 * 5.55)
= 75,500 + 19,980
= $95,480
Subtracting the cost to get,
= 95,480 - 2,600
= $92,880
The total gross profit would is $92,880.
Portions of the financial statements for Parnell Company are provided below. PARNELL COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands) Revenues and gains: Sales $ 840 Gain on sale of building 12 $ 852 Expenses and loss: Cost of goods sold $ 320 Salaries 124 Insurance 44 Depreciation 127 Interest expense 54 Loss on sale of equipment 11 680 Income before tax 172 Income tax expense 86 Net income $ 86 PARNELL COMPANY Selected Accounts from Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands) Year 2021 2020 Change Cash $ 142 $ 96 $ 46 Accounts receivable 332 212 120 Inventory 317 433 (116 ) Prepaid insurance 62 96 (34 ) Accounts payable 218 113 105 Salaries payable 110 89 21 Deferred tax liability 68 56 12 Bond discount 186 208 (22 ) Required: 2. Prepare the cash flows from operating activities section of the statement of cash flows for Parnell Company using the indirect method.
Answer:
Prepare the cash flows from operating activities section as follows :
Cash Flows from Operating Activities
Income before tax 172,000
Adjustments of Non- Cash Items :
Gain on sale of building ( 12,000)
Depreciation 127,000
Loss on sale of equipment 11,000
Adjustments of Changes in Working Capital :
Increase in Accounts Receivables (120,000)
Decrease in Inventory 116,000
Decrease in Prepaid insurance 34,000
Increase in Accounts payable 105,000
Increase in Salaries Payable 21,000
Increase in Deferred tax liability 12,000
Decrease in Bond discount (22,000)
Net Cash flow from Operating Activities 444,000
Explanation:
Indirect Method Adjust the Net Income before tax with movements in working capital items and non-cash items included in income statements.
Consider the following balance sheet for TD. Assets Liabilities Reserves 493 Deposits 2900 Loans 2407 4. Suppose that TD is a typical bank and keeps only the required reserves. Given this data, what is the money multiplier? 5. Suppose that TD is a typical bank and keeps only the required reserves. In addition, suppose that someone deposited $700. Given this data, what is the total change in the M1 Money Supply? 6. Suppose that someone deposited $700 at TD Bank. Given this data, what is the minimum amount by which the money supply will increase?
The money multiplier represents how much money the banking system can generate from each dollar of bank reserves. The money multiplier in this case is 2900. The total change in the M1 money supply when someone deposits $700 at TD Bank is $2,030,000.
Explanation:The money multiplier is a concept that shows how much money the banking system can generate from each dollar of bank reserves. It is calculated by dividing 1 by the reserve ratio, which is the fraction of deposits that a bank keeps as reserves. In this case, since the bank keeps only the required reserves, the reserve ratio is 1/2900. Therefore, the money multiplier would be 1 divided by 1/2900, which is equal to 2900.
To calculate the total change in the M1 money supply when someone deposits $700 at TD Bank, we use the formula:
Total Change in the M1 Money Supply = New Deposits x Money Multiplier
So, the total change in the M1 money supply would be $700 x 2900 = $2,030,000.
The minimum amount by which the money supply will increase when someone deposits $700 at TD Bank is $700 x 1 = $700, as the money multiplier is always greater than or equal to 1.
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The money multiplier is calculated as 1 divided by the reserve ratio. For TD Bank, which keeps only the required reserves, the money multiplier would be 1. Depositing $700 can lead to an increase in the M1 money supply by the same amount, though the final increase can vary due to several factors.
Explanation:To calculate the money multiplier, we use the formula 1 / reserve ratio. In this case, given that the bank only keeps the required reserves, we can assume a reserve ratio of 1 (if all reserves are kept), so the money multiplier would be 1.
With regard to the changes in the M1 money supply due to a deposit of $700, it will affect how much the bank can lend out. Since TD keeps only required reserves, it can lend out all of the $700. As a result, bank credit (and therefore the M1 money supply) could increase by $700.
The minimum increase in the money supply is harder to define due to several factors, including withdrawal of cash from the banking system. However, at least the amount deposited ($700) will be added to the money supply immediately.
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You have been asked by the CEO of your company to manage a really important project. The CEO suggested five employees to be on your project team. You now think about the right organizational structure. Under what project management structure would these five employees face the least trade-offs with their current responsibilities?
a. A dedicated project team
b. A heavyweight project manager
c. An advisory team
d. A matrix organization
Delaware Company incurred the following research and development costs during 2021: Salaries and wages for lab research $ 400,000 Materials used in R&D projects 200,000 Purchase of equipment 900,000 Fees paid to third parties for R&D projects 320,000 Patent filing and legal costs for a developed product 65,000 Salaries, wages, and supplies for R&D work performed for another company under a contract 350,000 Total $ 2,235,000 The equipment has a seven-year life and will be used for a number of research projects. Depreciation for 2021 is $120,000. Required: Calculate the amount of research and development expense that Delaware should report in its 2021 income statement.
Answer:
Total R&D Expense = 1040000 USD to be reported in 2021 income statement.
Explanation:
First of all, let me arrange this data in a quite presentable way to facilitate you.
1. Salaries and wages for lab research = 400,000 USD
2. Materials Used in R&D projects = 200,000 USD
3. Purchase of equipment = 900,000 USD
4. Fees paid to third parties for R&D projects = 320,000 USD
5. Patent filing and legal costs for a developed product = 65,000 USD
6. Salaries, wages, and supplies for R&D work performed for another company under a contract = 350,000 USD
Total Cost = 2,235,000 USD
Note: Depreciation for 2021 is 120,000 USD.
Now, we have to list out different costs included in Research and Development Expenses to be included in the income statement.
For R&D expenses, we need to look for costs that are directly related to R&D and add up those costs to calculate the R&D Expense that Delaware should report in its 2021 income statement.
Following cost components will be added together for the Research and Development Expenses:
1. Depreciation For 2021 = 120,000 USD
2. Materials Used in R&D projects = 200,000 USD
3. Fees paid to third parties for R&D projects = 320,000 USD
4. Salaries and wages for lab research = 400,000 USD
Total R&D Expense = 120,000 + 200,000 + 320,000 USD + 400,000 USD
Total R&D Expense = 1040000 USD to be reported in 2021 income statement.
The Delaware Company should report $1,040,000 as research and development expense in its 2021 income statement.
Data and Calculations:
Salaries and wages for lab research = $400,000
Materials used in R&D projects = 200,000
Fees to third parties 320,000
Depreciation of Equipment for 2021 120,000
Total expenses for income statement $1,040,000
Thus, the amount of research and development expense that Delaware should report in 2021 is $1,040,000.
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In 2020, Sandhill Co. reported a discontinued operations loss of $1160000, net of tax. It declared and paid preferred stock dividends of $120000 and common stock dividends of $355000. During 2020, Sandhill had a weighted average of 500000 common shares outstanding. As a result of the discontinued operations loss, net of tax, the earnings per share would decrease by
Answer:
$2.32
Explanation:
Data provided
Discontinued operations loss = $1,160,000
Common shares outstanding = 500,000
The computation of earnings per share is shown below:-
Decrease in earning per share due to loss in discontinued operations = Discontinued operations loss ÷ common shares outstanding
= $1,160,000 ÷ 500,000
= $2.32
Therefore for computing the decrease earning per share we simply appplied the above formula.
Answer:
The correct answer is 2.32.
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the decrease in earning per share due to loss in disconnected operations by using following formula:-
Decrease in Earning Per Share Due to Loss in Disconnected Operations = Discontinued Operation Loss ÷ Weighted Average Common Share Outstanding
By putting the value, we get
=$1,160,000 ÷ $500,000
= 2.32
The Assembly Department started the month with 78,000 units in its beginning Work in Process Inventory. An additional 254,000 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 21,000 units in the ending Work in Process Inventory of the Assembly Department.
How many units were transferred to the next processing department during the month?
Answer:
Outflow from assembly= 311,000 units
Explanation:
The assembly department in this scenario handles the work in process part of production.
Production involves different stages that includes: Raw material, work in process, finished goods.
Products flow through these different stages.
To calculate the amount transferred out we need to first calculate total WIP within the month
Total WIP= Inflow of product + Beginning inventory
Total WIP= 254,000 + 78,000
Total WIP= 332,000
Outflow from assembly= Total WIP - Ending WIP
Outflow from assembly= 332,000 - 21,000
Outflow from assembly= 311,000 units
Final answer:
To calculate the number of units transferred to the next processing department, subtract the Ending Work in Process Inventory from the sum of the Beginning Work in Process Inventory and the units added. A total of 311,000 units were transferred out during the month.
Explanation:
To determine the number of units transferred to the next processing department during the month, we should use the following formula for units in production:
Units Transferred Out = Units at the beginning + Units added - Ending Work in Process Inventory
In this case:
Units at the beginning (Beginning Work in Process Inventory) = 78,000 unitsUnits added (transferred in from the prior department) = 254,000 unitsEnding Work in Process Inventory = 21,000 unitsTo calculate:
Units Transferred Out = 78,000 + 254,000 - 21,000
Units Transferred Out = 311,000 units
Therefore, 311,000 units were transferred to the next processing department during the month.
If you wanted your organizational unit to create a new product that is essentially an entirely new industry, what type of innovation would you encourage? A radical innovation A systems innovation An incremental innovation Choose the answer that best completes each sentence. Because workgroups develop their own , intranets build a common cultural foundation that can help unify employees in different units and locations around common company values.
Answer:
1. A radical innovation.
2. Subcultures
Explanation:
If you wanted your organizational unit to create a new product that is essentially an entirely new industry, you will encourage a radical innovation.
A radical innovation also known as the disruptive innovation is an innovative approach aimed at destroying or supplanting old business strategies and models with an invention to breakthrough and change the whole industries by creating new products.
Because workgroups develop their own subcultures, intranets build a common cultural foundation that can help unify employees in different units and locations around common company values.
Precision Tool is trying to decide whether to lease or buy some new equipment for its tool and die operations. The equipment costs $1.2 million has a 7-year life, and will be worthless after the 7 years. The pre-tax cost of borrowed funds is 8 percent and the tax rate is 32 percent. The equipment can be leased for $242,500 a year. What is the value of the lease? Should the firm purchase the asset via debt-financing or sign a long-term financial lease agreement?
Answer:
-$51,566.
Explanation:
So, we are given the following parameters in the question above;
Cost of equipment = $1.2 million, pre-tax cost of borrowed funds = 8 percent, tax rate = 32 percent and the equipment can be leased for = $242,500 a year.
Step one : Calculate the After-Tax lease payment .
The After-Tax lease payment = ($242,500) × (1 - 0.32) = $164,900.
Step two: Calculate the Annual Depreciation Tax-Shield.
Annual Depreciation Tax-Shield = ($1,200,000/7) × (0.32) = $54,857.
Step three: Calculate the After-Tax Discount Rate.
The After-Tax Discount Rate = 0.08 × (1 - 0.32) = 5.44%.
Step four: Calculate the Net Advantage to Leasing.
The Net Advantage to Leasing = $1,200,000 - ($164,900 + $54,857.14) × (PVIFA 5.44%, 7).
= -$51,566
Dave Krug contributed $1,800 cash along with inventory and land to a new partnership. The inventory had a book value of $1,600 and a market value of $3,600. The land had a book value of $2,200 and a market value of $6,600. The partnership also accepted a $3,800 note payable owed by Krug to a creditor. Prepare the partnership’s journal entry to record Krug’s investment.
Answer and Explanation:
The Journal entry is shown below:-
Cash Dr, $1,800
Inventory Dr, $3,600
Land Dr, $6,600
To Notes payable $3,800
To Krug's Capital $8,200
(Being Krug’s investment is recorded)
Therefore to record the
Here the assets are increasing so we debited the cash, inventory and land while the liabilities and stakeholder equity also increase so we credited the notes payable and Krug's capital.
Tasty Doughnuts has computed the net present value for capital expenditure at two locations. Relevant data related to the computation are as follows: Des Moines Cedar Rapids Total present value of net cash flow $712,500 $848,000 Amount to be invested (750,000) (800,000) Net present value $(37,500) $ 48,000 a. Determine the present value index for each proposal. Round your answers for the present value index to two decimal places. Des Moines Cedar Rapids Total present value of net cash flow $ $ Amount to be invested Present value index b. Which location does your analysis support
Answer:
First location 0.95
Second location is 1.06
My analysis is in support of the second location with a present value index
Explanation:
Present value index compares the present value of cash inflows a project with the actual amount invested initially on the project.
A present value in of greater than one suggest that the net present value outweighs the initial capital outlay.
First location:
initial investment was $750,000
present value of cash inflows is $712,500
present value index= $712,500/750,000=0.95
Second location:
initial investment was $800,000
present value of cash inflows is $848,000
present value index= $848,000/$800,000=1.06
n 2013, a federal judge ruled that Apple colluded with five major U.S. publishers to artificially drive up the prices of e-books (which could be read on Apple's iPad). Apple collects a 30% commission on the price of a book from the publisher. Why would Apple want to help publishers raise their price? Given Apple's commission, what price would a book cartel want to set? (Hint: The marginal cost of an e-book is virtually zero.) Apple wants to help publishers raise their price because Apple's profits are
Answer:
(1). The reason is Because Apple's Profit are maximized where the publishers profits are maximized.
(2). Check last paragraph.
Explanation:
To be sincere really, Apple is not really helping the publishers. From the question above we can see that the company that is Apple do collects a 30% commission on the price of a book from each of the United States of America publishers. Therefore, IF the price is INCREASED, Apple will make more commission/profit.
The answer to the second part of the question is that; With Apple's commission, the price that a book cartel will want to set will be be done make making sure that OUTPUT are RESTRICTED to where Marginal revenue is zero that is to say profit plus the 30% commission.
Your family owns an upscale car dealership called Jaguar Territory (JT) which sells Jaguars. Because you study marketing, your father asked you to develop an advertisement for the store. You know that it is important for consumers to pay attention to your ad or else the money you've spent on media exposure is wasted. Define attention, discuss how five of the several stimulus factors (ie. Size, Intensity, Color and Movement, etc.) influence attention to a stimulus, and explain how you can use each in your advertisement
Answer:
Consideration relates to the arbitrary ratio of the effectiveness of an product in the excitement that the company offers for a viewer of the item appears. Adverts stick out for us by very defined images and include a placed picture of the object such that the institution 's function and emblem draws into account for the customers.
Stimuli influences are essentially the stimuli' physical characteristics, there are different features of change that stick out for us, depending mostly on the person brand.
I) Size and stimulation authority. Of starters, the automobile manufacturer should have a full-page advertising in the paper that would rely on the attention of more people as opposed to a half-page advertising in a comparable article.
ii) Isolated onset, template that car seller receives the dealership commercial once a month which would have less effect as comparison to have regurgitated throughout 10 days or 15 days.
iii) advertorial-premium automotive paint blends by and wide provide a superb coloring that is used in print advertisements.
iv) The location of the promotional object is similarly important. The car being promoted should be in the central focus of the camera.
V) Isolation means the partitioning of stimuli items from separate objects, multiple papers are drained away and attention is difficult to generate. Within, the automobile commercial will place a short note.
Gabriella and Juanita form Luster Corporation. Gabriella transfers cash of $50,000 for 50 shares of stock, and Juanita transfers information concerning a proprietary process copyright (basis of zero and fair market value of $50,000) for 50 shares of stock. Group of answer choices Neither Gabriella nor Juanita will recognize gain on the transfer. Because Juanita is required to recognize gain on the transfer, Gabriella also must recognize gain. Juanita must recognize gain of $50,000. The transfers to Luster are fully taxable to both Gabriella and Juanita.
Answer: Neither Gabriella nor Juanita will recognize gain on the transfer.
Explanation:
Gabriella made no gain on the transfer as she transferred the same amount of cash the stock was worth and received no benefits.
Juanita also transferred an Intangible Asset that was worth the same amount of money as the shares that she bought for them meaning no benefits accrue either and therefore no gain is recognized.
Final answer:
Neither Gabriella nor Juanita will recognize gain on the transfer to Luster Corporation for stock since it is non-taxable under IRC Section 351, assuming they meet the control requirement after the exchange.
Explanation:
When Gabriella and Juanita form Luster Corporation and transfer assets for the corporation's stock, we need to consider tax implications. Under typical Internal Revenue Code provisions regarding contributions of property to a corporation in exchange for stock (IRC Section 351), if a person contributes property to a corporation and immediately afterward is in control of the corporation, they will not recognize a gain or loss on the transfer. In this case, both Gabriella and Juanita should not recognize any gain as long as Luster Corporation is considered a controlled corporation where they have control immediately following the exchange.
Gabriella's cash transfer of $50,000 for 50 shares and Juanita's transfer of information concerning a proprietary process with a fair market value of $50,000 for 50 shares would both not be taxable events, provided that the control requirement is met and both parties receive only stock of the corporation in return. Juanita's basis of zero in the copyright should not trigger a gain recognition as long as Section 351 applies. Therefore, the correct answer is that neither Gabriella nor Juanita will recognize gain on the transfer.
company used straight-line depreciation for an item of equipment that cost $20,300, had a salvage value of $5,600 and a six-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $2,030 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:
Answer:
$3,640
Explanation:
Straight line method of depreciation, measures same amount of depreciation over the useful life of the asset.
Depreciation Charge = Cost - Salvage Value / Number of Useful Life
Depreciation for the each of the First 3 years :
Depreciation Charge = Cost - Salvage Value / Number of Useful Life
= ($20,300 - $5,600) / 6
= $2,450
Accumulated Depreciation = $2,450 × 3
= $7,350
New Depreciation Charge After 3 years:
Depreciation Charge = (Cost - Sum of Previous Depreciation Charges - New Salvage Value) / Number of Remaining Useful Life
= ($20,300 - $7,350 - $2,030) / 3
= $3,640
Therefore, the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life would be $3,640 .
A taxicab company maintain accurate records of the expenses for one of its automobiles from January 1, 1996 through January 1, 2002. It is found from the records, the annual operating expense is $4,000. The maintenance and repair costs are $500 for 1996, $1,000 for year 1997, $1,500 for year 1998, and so on. What is the net present cost of owning and operating the automobile; the initial price was $35,000 and the interest rate is 9%
Answer:
$60,233
Explanation:
the net present cost of operating and owning a taxi:
purchase price = $35,000
1996 = ($4,000 + $500) / 1.09 = $4,128
1997 = ($4,000 + $1,000) / 1.09² = $4,208
1998 = ($4,000 + $1,500) / 1.09³ = $4,247
1999 = ($4,000 + $2,000) / 1.09⁴ = $4,251
2000 = ($4,000 + $2,500) / 1.09⁵ = $4,225
2001 = ($4,000 + $3,000) / 1.09⁶ = $4,174
total = $60,233
The net present cost is the present value of all the costs related to a project or investment. In this case, we must discount all the annual operating costs of the taxi by 9%.
On January 10, Andrew Farley uses his Paltrow Co. credit card to purchase merchandise from Paltrow Co. for $17,500. On February 10, Farley is billed for the amount due of $17,500. On February 12, Farley pays $8,750 on the balance due. On March 10, Farley is billed for the amount due, including interest at 4% per month on the unpaid balance as of February 12. Prepare the entries on Paltrow Co.’s books related to the transactions that occurred on January 10, February 12, and March 10.
Answer and Explanation:
As per the data given in the question,
Entries on Paltrow Co.'s books :
Jan-10 Accounts receivable A/c Dr. $17,500
To Sales revenue A/c. $17,500
(Being sales on account is recorded)
Feb-12 Cash A/c Dr. $8,750
To Accounts receivable A/c. $8,750
(Being cash receipt on credit sales is recorded)
Mar-10 Accounts receivable A/c Dr. $350
To interest revenue A/c. $350
($17,500 - $8,750 = $8,750 × 4% = 350)
( Being due amount with interest is recorded)
Final answer:
On January 10, Paltrow Co. would record a debit to accounts receivable and a credit to Andrew Farley's accounts payable. On February 12, when Farley pays, the entry would be a debit to accounts receivable and a credit to cash. On March 10, when Farley is billed for the remaining balance due plus interest, the entry would be a debit to accounts receivable and interest expense, and a credit to interest revenue and accounts payable.
Explanation:
On January 10, the transaction would be recorded as a debit to Paltrow Co.'s accounts receivable and a credit to Andrew Farley's accounts payable. The journal entry would be:
Accounts Receivable $17,500
Accounts Payable $17,500
On February 12, when Farley pays $8,750, the entry would be a debit to accounts receivable and a credit to cash. The journal entry would be:
Cash $8,750
Accounts Receivable $8,750
On March 10, when Farley is billed for the remaining balance due plus interest, the entry would be a debit to accounts receivable and interest expense, and a credit to interest revenue and accounts payable. The journal entry would be:
Accounts Receivable $8,750
Interest Expense $350
Interest Revenue $350
Accounts Payable $8,750
Since we use GDP to determine a nation’s health, we can only add the market value of the goods and services produced in the United States (domestic production) for a single year. We also do not add the value of intermediate goods, ingredients/items used to produce final products. We only count the value of final goods and services which have been produced within the year. Including the value of both the intermediate goods and the final goods and services would lead to double counting and increase the value of GDP.Directions: For each item place either an "I" if the scenario is an intermediate product, or an "F" if it is a final product.
a. Shampoo is bought and used by a hair stylist in the mall.
b. A family buys some finger paint for their child to use.
c. A person buys a tire to replace to flat one on their car.
d. A hotel chain buys a box of pens.
e. Flour is bought and used to bake a cake to be sold at a bakerySomeone buys a steak to grill at home.
f. An accounting firm buys calculators for its accountants.
g. A person buys shampoo to use at home.
h. Flour is bought and used to bake a cake for a birthday.
i. A student buys a pack of pens to do their homework.
j. A restaurant prepares a steak for its customers.
k. A factory buys tires to place on their cars.
l. An artist buys paints for a painting, with the intention of keeping it.
m. A calculator is bought and used for mathematics homework.
n. An artist buys paints for a landscape painting, with the intention of selling it.
Answer:
a. Shampoo is bought and used by a hair stylist in the mall. - F
It is a final product bought by the final consumer (the hair sytlist). It is part of GDP.
b. A family buys some finger paint for their child to use. - F
It is a final product bought by the final consumer (the family). It is part of GDP.
c. A person buys a tire to replace to flat one on their car. - F
It is a final product bought by the final consumer (the person who will replace the flat tire). It is part of GDP.
d. A hotel chain buys a box of pens. - F
It is a final product bought by the final consumer (the hotel). It is part of GDP.
e. Flour is bought and used to bake a cake to be sold at a bakerySomeone buys a steak to grill at home. - I
It is an intermediate product, because the flour will be made into cakes, that will then be sold, taking into account the value of the flour itself. It is not part of GDP.
f. An accounting firm buys calculators for its accountants. - F
It is a final product bought by the final consumer (the firm). It is part of GDP.
g. A person buys shampoo to use at home. - F
It is a final product bought by the final consumer (the person). It is part of GDP.
h. Flour is bought and used to bake a cake for a birthday. - F
It is final good because the flour will be made into a birthday cake, but the cake will be conumed at home. If the birthday cake is later sold, then, the flour is an intermediate good.
i. A student buys a pack of pens to do their homework. - F
It is a final product bought by the final consumer (the student). It is part of GDP.
j. A restaurant prepares a steak for its customers. - F
The steak is a final product, it will be consumed by customers for a value that the restaurant has set. This value is part of GDP.
k. A factory buys tires to place on their cars. -I
The tires are intermediate goods because they will be put in cars that they factory will later sell. The tires are not part of GDP.
l. An artist buys paints for a painting, with the intention of keeping it. - F
The painting is a final good because they customer has bought it to keep it a home. It is part of GDP.
m. A calculator is bought and used for mathematics homework. - F
It is a final product bought by the final consumer (the person doing math work). It is part of GDP.
n. An artist buys paints for a landscape painting, with the intention of selling it. - I
The paints are intermediate because their value will be put into the making of the landscape painting, which will be sold for a price that will take into account the cost of the paints. The paints are not part of GDP.
Final answer:
In GDP calculations, it is essential to differentiate intermediate goods, which are used in producing other goods, from final goods that are ready for consumption. This measure prevents double counting in the economy and reflects the true size of a nation's output and income.
Explanation:
When calculating the Gross Domestic Product (GDP), it is crucial to differentiate between intermediate and final goods to avoid the problem of double counting. GDP measures the value of all final goods and services produced in a nation in a year.
F - Shampoo bought and used by a hair stylist in the mall (final consumer)
F - A family buys some finger paint for their child to use (final consumer)
F - A person buys a tire to replace the flat one on their car (final consumer)
I - A hotel chain buys a box of pens (intermediate, pens will be used in business operations)
I - Flour bought and used to bake a cake to be sold at a bakery (intermediate, the cake is the final product)
F - Someone buys a steak to grill at home (final consumer)
I - An accounting firm buys calculators for its accountants (intermediate, used in providing services)
F - A person buys shampoo to use at home (final consumer)
I - Flour is bought and used to bake a cake for a birthday (intermediate, the cake is the final product)
F - A student buys a pack of pens to do their homework (final consumer)
F - A restaurant prepares a steak for its customers (final product)
I - A factory buys tires to place on their cars (intermediate, the car is the final product)
F - An artist buys paints for a painting, with the intention of keeping it (final consumer)
F - A calculator is bought and used for mathematics homework (final consumer)
I - An artist buys paints for a landscape painting, with the intention of selling it (intermediate, the painting is the final product).
Final goods are those that are at the furthest stage of production and are ready for sale to the end consumer, while intermediate goods are used to produce final goods and are not included in GDP calculations.
During 2020 the Blossom Company had a net income of $84000. In addition, selected accounts showed the following changes: Accounts Receivable $2500 increase Accounts Payable 800 increase Buildings 3800 decrease Depreciation Expense 1300 increase Bonds Payable 7000 increase What was the amount of cash provided by operating activities? $91800. $85300. $83600. $84000.
Answer:
The amount of cash provided by operating activities was $83,600
Explanation:
The amount of cash provided by operating activities is calculating by using following formula:
Net Income + Non-Cash Expenses (Depreciation, Depletion & Amortization Expense) + Non-Operating Losses (Loss on Sale of Non-Current Assets) − Non-Operating Gains (Gain on Sale of Non-Current Assets) + Decrease in Current Assets − Increase in Current Assets + Increase in Current Liabilities − Decrease in Current Liabilities.
In the Blossom Company,
The amount of cash provided by operating activities = Net Income + Depreciation Expense - Increase in Accounts Receivable + Increase in Accounts Payable = $84,000 + $1,300 - $2,500 + $800 = $83,600
Powell Warehouse distributes hardback books to retail stores and extends credit terms of 4/10, n/30 to all of its customers. During the month of June, the following merchandising transactions occurred.
June 1 Purchased books on account for $2,840 (including freight) from Catlin Publishers, terms 4/10, n/30.
3 Sold books on account to Garfunkel Bookstore for $1,050. The cost of the merchandise sold was $700.
6 Received $40 credit for books returned to Catlin Publishers.
9 Paid Catlin Publishers in full.
15 Received payment in full from Garfunkel Bookstore.
17 Sold books on account to Bell Tower for $1,050. The cost of the merchandise sold was $750.
20 Purchased books on account for $700 from Priceless Book Publishers, terms 2/15, n/30.
24 Received payment in full from Bell Tower.
26 Paid Priceless Book Publishers in full.
28 Sold books on account to General Bookstore for $2,600. The cost of the merchandise sold was $750.
30 Granted General Bookstore $260 credit for books returned costing $65.
Journalize the transactions for the month of June for Powell Warehouse, using a perpetual inventory system
Answer:
June 1
Dr Inventory 2840
Cr Accounts Payable 2840
June 3
Dr Accounts receivable 1050
Cr sales revenue 1050
Dr Cost of goods sold 700
Cr nventory 700
June 6
Dr Accounts payable40
Cr Inventory40
June 9
Dr Accounts payable 2,800
Cr Cash 2,744
Cr Inventory 56
June 15
Dr Cash 1050
Cr Accounts receivable 1050
June 17
Dr Accounts receivable 1050
Cr Sales revenue 1050
Dr Cost of Goods sold 750
Cr Inventory 750
June 20
Dr Inventory 700
Cr Accounts payable 700
June 24
Dr Cash 1029
Dr sales discounts 21
Cr Account receivable 1050
June 26
Dr Account payable 700
Cr Inventory 14
Cr Cash 686
June 28
Dr Account Receiveable 2600
Cr Sales Revenue 2600
Dr Cost of goods sold 750
Cr Inventory 750
June 30
Dr Sales return and allowance 260
Cr Account receivable 260
Dr Inventory 65
Cr Cost of goods sold 65
Explanation:
Powell Warehouse Journal entries
June 1
Dr Inventory 2840
Cr Accounts Payable 2840
June 3
Dr Accounts receivable 1050
Cr sales revenue 1050
Dr Cost of goods sold 700
Cr nventory 700
June 6
Dr Accounts payable40
Cr Inventory40
June 9
Dr Accounts payable 2,800
(2,840-40)
Cr Cash 2,744
Cr Inventory 56
(2%×2,800)
June 15
Dr Cash 1050
Cr Accounts receivable 1050
June 17
Dr Accounts receivable 1050
Cr Sales revenue 1050
Dr Cost of Goods sold 750
Cr Inventory 750
June 20
Dr Inventory 700
Cr Accounts payable 700
June 24
Dr Cash 1029
Dr sales discounts 21
(2%×1050)
Cr Account receivable 1050
June 26
Dr Account payable 700
Cr Inventory (2%×700) 14
Cr Cash 686
June 28
Dr Account Receiveable 2600
Cr Sales Revenue 2600
Dr Cost of goods sold 750
Cr Inventory 750
June 30
Dr Sales return and allowance 260
Cr Account receivable 260
Dr Inventory 65
Cr Cost of goods sold 65
The mythical Hacker Microbrewery in Rosenheim, Germany, makes a brand of beer called Golden Eagle, which bottles and sells in cases to adjoining pubs and stores in Rosenheim. The setup cost of brewing and bottling a batch of beer is the US $1,800 per setup. The annual demand for the Golden Eagle brand of beer is 20,000 bottles. Hacker Microbrewery brews and bottles beer at a rate of 655 bottles per day. The brewery operates 250 days per year.
a. What is the economic production quantity (EPQ)?
b. What is the average inventory level for this optimum pro quantity? c. How many production setups would there be in a year?
d. What is the optimal length of the production run in days?
e. What would be the savings in annual inventory co can be reduced to $1,500 per setup?
Answer:
Explanation:
Annual demand (D) = 20000 units
Number of days per year = 250
Demand rate(d) = D/number of days per year = 20000/250 = 80 units
Production rate(p) = 655 units
Set up cost(S) = $1800
Holding cost (H) = $1.50
A) Optimum run size(Q) = sqrt of {2DS / H [1-(d/p)]}
= sqrt of {(2x20000x1800) /1.50[1-(80/655)]}
= Sqrt of [7200000/1.50(1-0.1221) ]
= sqrt of [72000000/(1.50 x 0.8779)]
= sqrt of (7200000/1.31685)
= Sqrt of 5467593.1199
= 2338 units
b) Maximum inventory ( I - max) = (Q/p) (p-d) = (2338/655)(655-80) = 3.5695 x 575 = 2052.46 or rounded off to 2052 units
Average inventory = I-max/2 = 2052/2 = 1026 units
C) Number of production setups per year = D/Q = 20000/2338 = 8.55 or rounded up to 6
d) optimal length of production run = optimal run size /production rate = 2338/655 = 3.56 or rounded up to 4 days
The final answers are:
a. EPQ = 2,047 bottles
b. Average inventory level = 1,024 bottles
c. Number of setups per year = 10
d. Optimal run length = 4 days
e. New EPQ = 1,868 bottles, and the savings in annual inventory holding costs are proportional to the reduction in the average inventory level.
To solve the problem, we will follow the steps outlined in the Economic Order Quantity (EOQ) model, which is closely related to the Economic Production Quantity (EPQ) model. The EOQ model is used to determine the optimal number of units to order per order that minimizes total inventory costs. The EPQ model extends this to production runs.
Given:
- Setup cost per batch, S = $1,800
- Annual demand for beer, D = 20,000 bottles
- Production rate, P = 655 bottles per day
- Number of operating days per year, T = 250 days
- Reduced setup cost, S' = $1,500 (for part e)
a. To find the Economic Production Quantity (EPQ), we use the formula:
[tex]\[ EPQ = \sqrt{\frac{2DS}{H}} \][/tex]
where H is the holding cost per bottle per year. However, we do not have the holding cost directly given. Instead, we can use the annual demand and the production rate to find the number of production runs needed per year and then calculate the EPQ.
First, we calculate the number of bottles produced per year:
[tex]\[ \text{Bottles produced per year} = P \times T \] \[ \text{Bottles produced per year} = 655 \times 250 \] \[ \text{Bottles produced per year} = 163,750 \][/tex]
Since the annual demand is 20,000 bottles, we can find the number of production runs needed per year:
[tex]\[ \text{Number of runs per year} = \frac{D}{P \times T} \] \[ \text{Number of runs per year} = \frac{20,000}{163,750} \] \[ \text{Number of runs per year} = \frac{20,000}{250} \] \[ \text{Number of runs per year} = 80 \][/tex]
Now, we can calculate the EPQ by finding out how many bottles are produced per setup:
[tex]\[ \text{Bottles per setup} = \frac{P \times T}{80} \] \[ \text{Bottles per setup} = \frac{163,750}{80} \] \[ \text{Bottles per setup} = 2,046.875 \][/tex]
Since we cannot produce a fraction of a bottle, we round this to 2,047 bottles per setup.
b. The average inventory level for this optimum production quantity is half of the EPQ:
[tex]\[ \text{Average inventory level} = \frac{EPQ}{2} \] \[ \text{Average inventory level} = \frac{2,047}{2} \] \[ \text{Average inventory level} = 1,023.5 \][/tex]
Again, rounding to the nearest whole number, we get 1,024 bottles.
c. The number of production setups in a year is the annual demand divided by the EPQ:
[tex]\[ \text{Number of setups per year} = \frac{D}{EPQ} \] \[ \text{Number of setups per year} = \frac{20,000}{2,047} \] \[ \text{Number of setups per year} \approx 9.77 \][/tex]
Since we cannot have a fraction of a setup, we round this to 10 setups per year.
d. The optimal length of the production run in days is the EPQ divided by the daily production rate:
[tex]\[ \text{Optimal run length} = \frac{EPQ}{P} \] \[ \text{Optimal run length} = \frac{2,047}{655} \] \[ \text{Optimal run length} \approx 3.12 \text{ days} \][/tex]
Since we cannot operate for a fraction of a day, we round this to 4 days.
e. To calculate the savings in annual inventory holding costs when the setup cost is reduced to $1,500, we first need to find the new EPQ with the reduced setup cost:
[tex]\[ \text{New EPQ} = \sqrt{\frac{2DS'}{H}} \][/tex]
Since we do not have the holding cost H, we will use the relationship between the setup costs and the EPQs to find the new EPQ. Let's denote the original EPQ as EPQ_old and the new EPQ as EPQ_new:
[tex]\[ EPQ_{old} = \sqrt{\frac{2DS}{H}} \] \[ EPQ_{new} = \sqrt{\frac{2DS'}{H}} \] \[ \frac{EPQ_{new}}{EPQ_{old}} = \sqrt{\frac{S'}{S}} \] \[ EPQ_{new} = EPQ_{old} \times \sqrt{\frac{S'}{S}} \] \[ EPQ_{new} = 2,047 \times \sqrt{\frac{1,500}{1,800}} \] \[ EPQ_{new} = 2,047 \times \sqrt{\frac{5}{6}} \] \[ EPQ_{new} = 2,047 \times 0.9129 \] \[ EPQ_{new} \approx 1,867.5 \][/tex]
Rounding to the nearest whole number, we get 1,868 bottles.
Now, we calculate the new average inventory level:
[tex]\[ \text{New average inventory level} = \frac{EPQ_{new}}{2} \] \[ \text{New average inventory level} = \frac{1,868}{2} \] \[ \text{New average inventory level} = 934 \][/tex]
The savings in annual inventory holding costs can be approximated by the difference in the average inventory levels times the holding cost per bottle per year. However, since we do not have the holding cost H, we cannot calculate the exact savings. We can only state that the savings will be proportional to the reduction in the average inventory level.
YZ Corporation, located in the United States, has an account payable of 750-million yen payable in one year to a bank in Tokyo. The current spot rate is yen 116 per $ and the one year forward rate is yen 109 per $. The annual interest rate is 3 percent in Japan and 6 percent in the United States (assume the same lending and borrowing rates). The future (in one year) dollar cost of meeting this obligation using the money market hedge is:
Answer:
Dollar cost of the foreign payable = $ 6,653,833.28
Explanation:
The money market hedge would be set up as follows:
Step 1: Deposit in Yen (Tokyo)
Deposit an amount in Yen equal to
Amount to be deposited= Payable/(1+deposit rate)
= 750,000,000/(1.03)
= Yen 728,155,339.8
Step 2 : Convert the sum
Convert Yen 728,155,339.8 at the spot rate of yen 116 per $
Dollar amount = 728,155,339.8 / 116
= $ 6,277,201.205
Step 3: Borrow at home (US)
Borrow $ 6,277,201.205 for one year at an interest rate of 6%
Amount due (inclusive of interest) = Amount borrowed × 1.06
=$ 6,277,201.205 × 1.06
= $ 6,653,833.28
Dollar cost of the foreign payable = $ 6,653,833.28
What is the ending inventory for period 8 when the MPS is 0 units?
The ending inventory for period 7 was 89 units. The forecasted demand for period 7 was 120 units while, for period 8, it is 20 units. The customer order for period 8 is 25 units. Select one:
a. 54 units
b. 64 units
c. 89 units
d. 69 units
Answer:
Ending inventory = 64 units
Explanation:
Given:
Ending inventory for period 7 = 89 units
Forecast demand for period 7 = 120 units
Forecast demand for period 8 = 20 units
Customer order for period 8 = 25 units
MPS = 0 units
Computation:
Ending inventory = Ending inventory for last period + MPS - maximum from (Forecast demand for Current period ,Customer order for current period)
Ending inventory = 89 units + 0 - maximum from (20 , 25)
Ending inventory = 89 units -25 units
Ending inventory = 64 units