Answer:
$7,000 is the amount of revenue in year 1
Explanation:
The amount received from the customer is $24,000,which is payment for work to be performed over 24-month period i.e 2 years
In year 1,the work would be performed from June -December,hence 7-month worth of revenue should be recognized in year 1 as follows
revenue recognition in year=$24,000*7/24=$7,000
The amount of revenue attributable to year 1 on the income statement is $7,000
During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions.
July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock.
July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200
July 7 Purchased supplies on account from Little Company, $1,000.
July 10 Paid employee salaries, $3,500
July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due.
July 15 Received cash for preparing tax returns for the first half of July, $8,000
July 19 Made payment on account to Lake Company, $500.
July 31 Received cash for preparing tax returns for the last half of July, $9,000
July 31 Declared and paid cash dividends of $600.
Required:
Prepare the financial statements for the Quick Tax Corporation as of July 31
Answer:
Trial Income Statement:
Service revenue $17,000
Rent expense ($3,500)
Insurance expense ($350)
Wages expense ($10,500)
Net income $2,650
*We need to adjust other expenses like supplies or utilities. I assumed the salaries paid were for a 10 days period since no one pays salaries in advance.
Trial Balance Sheet
Assets:
Cash $62,200
Supplies $1,000
Prepaid insurance $3,850
Equipment $10,000
Total Assets $77,050
Liabilities and Equity:
Accounts payable $8,000
Wages payable $7,000
Common Stock $60,000
Retained earnings $2,050
Total Liabilities and Equity $77,050
Explanation:
July 1
Dr Cash 60,000
Cr Common stock 60,000 (6,000 stocks $10 par value)
July 3
Rent expense 3,500
Cr Cash 3,500
July 5
Dr Prepaid insurance 4,200
Cr Cash 4,200
Adjusting entry July 31
Dr Insurance expense 350
Cr Prepaid insurance 350
July 7
Dr Supplies 1,000
Cr Accounts payable 1,000
July 10
Dr Wages expense 3,500
Cr Cash 3,500
Adjusting entry July 31
Dr Wages expense 7,000 ($3,500 x 2 10 day periods)
Cr Wages payable 7,000
July 14
Dr Equipment 10,000
Cr Cash 2,500
Cr Accounts payable 7,500
July 15
Dr Cash 8,000
Cr Service revenue 8,000
July 19
Dr Accounts payable 500
Cr Cash 500
July 31
Dr Cash 9,000
Cr Service revenue 9,000
Dr Retained earnings 600
Cr Dividends payable 600
Dr Dividends payable 600
Cr Cash 600
A manager must decide how many machines of a certain type to purchase. Each machine can process 100 customers per day. One machine will result in a fixed cost of $2,100 per day, while two machines will result in a fixed cost of $3,900 per day. Variable costs will be $17 per customer, and revenue will be $45 per customer.
a. Determine the break-even point for each range. (Round your answers to the next whole number.) One machine Two machines
b. If estimated demand is 90 to 120 customers per day, how many machines should be purchased?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Each machine can process 100 customers per day. One machine will result in a fixed cost of $2,100 per day, while two machines will result in a fixed cost of $3,900 per day. Variable costs will be $17 per customer, and revenue will be $45 per customer.
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
1 machine:
Break-even point in units= 2,100/ (45 - 17)
Break-even point in units= 75 costumers
2 machines:
Break-even point in units= 3,900/ 28
Break-even point in units= 139 costumers
If the demand is from 90 to 120 costumers per day, the company should buy 1 machine. With this level of demand, the company will not cover the costs of two machines.
Exercise 3-2 (Static) Balance sheet classification [LO3-2, 3-3] The following are the typical classifications used in a balance sheet: a. Current assets f. Current liabilities b. Investments g. Long-term liabilities c. Property, plant, and equipment h. Paid-in capital d. Intangible assets i. Retained earnings e. Other assets Required: For each of the following balance sheet items, use the letters above to indicate the appropriate classification category. (If the item is a contra account, select the appropriate letter with a minus sign.)
Answer:
1. Accrued interest payable: f. Current liabilities
2. Franchise: e. Other assets (intangible asset)
3. Accumulated depreciation: c. Property, plant, and equipment (contra asset account)
4. Prepaid insurance, for 2017: a. Current assets
5. Bonds payable, due in 10 years: g. Long-term liabilities
6. Current maturities of long-term debt: f. Current liabilities
7. Note payable, due in three months: f. Current liabilities
8. Long-term receivables: b. Investments
9. Restricted cash, will be used to retire bonds in 10 years: b. Investments
10. Supplies: a. Current assets
11. Machinery: c. Property, plant, and equipment
12. Land, in use: c. Property, plant, and equipment
13. Deferred revenue: f. Current liabilities
14. Copyrights: e. Other assets (intangible asset)
15. Preferred stock : h. Paid-in capital
16. Land, held for speculation: b. Investments
17. Cash equivalents: a. Current assets
18. Wages payable: f. Current liabilities
Mills Corporation acquired as an investment $260 million of 6% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $300 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $280 million.
Required: 1. & 2. Prepare the journal entry to record Mills' investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.
3. Prepare the journal entry by Mills to record any fair value adjustment necessary for the year ended December 31, 2021.
4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $314 million. Prepare the journal entries required on the date of sale.
Answer:
1.
Dr Investment in Bonds 260
Dr Premium on Investment in Bonds 40
Cr Cash $300
2.
Dr Cash$7.8
Cr Premium on Investment in Bonds $1.8
Cr Interest Revenue $6
3.
Dr Investment in bonds $260
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds -$1.8
Cr Carrying Value $298.2
4.
Dr Cash $314
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds amortized -$1.8
Dr Investment in bonds $260
Cr Gain due to investment sale $15.8
( $260+$40-1.8)-314
Explanation:
Mills Corporation Journal Entry ( $ million)
1.
Dr Investment in Bonds 260
Dr Premium on Investment in Bonds 40
(300 -260)
Cr Cash $300
2.
Dr Cash
($260 million X 6% / 2) $7.8
Cr Premium on Investment in Bonds $1.8
Cr Interest Revenue
($300 million X 4% / 2) $6
3.
Dr Investment in bonds $260
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds -$1.8
Cr Carrying Value $298.2
($260+$40-$1.8
4.
Dr Cash $314
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds amortized -$1.8
Dr Investment in bonds $260
Cr Gain due to investment sale $15.8
( $260+$40-1.8)-314
Sunland Corporation’s recent sale to a firm in Mexico produced revenues of 13,520,000 Mexican pesos (MPs). If the firm sold the pesos to its bank and was credited with $1,189,760.00, what was the spot rate at which the pesos were converted?
Answer:
11.3636 Mexican pesos per US dollar
Explanation:
total revenue in Mexican pesos = 13,520,000
total US dollars received = 1,189,760
spot rate = 13,520,000 Mexican pesos / 1,189,760 US dollars = 11.3636 Mexican pesos per US dollar
The spot exchange rate is the current price of a currency compared to another currency, e.g. if you have US$1,000, you could purchase 11,363.6 Mexican pesos.
Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Chapman as of May 31, 2017, are as follows. The company is preparing its statement of cash flows.
CHAPMAN COMPANY
COMPARATIVE BALANCE SHEET
AS OF MAY 31
2017 2016
Current assets
Cash $28,250 $20,000
Accounts receivable
75,000 58,000
Inventory 220,000 250,000
Prepaid expenses 9,000 7,000
Total current assets 332,250 335,000
Plant assets 600,000 502,000
Less: Accumulated 150,000 125,000
depreciation—plant assets
Net plant assets 450,000 377,000
Total assets $782,250 $712,000
Current liabilities
Accounts payable $123,000 $115,000
Salaries and wages payable 47,250 72,000
Interest payable 27,000 25,000
Total current liabilities 197,250 212,000
Long-term debt
Bonds payable 70,000 100,000
Total liabilities 267,250 312,000
Stockholders’ equity
Common stock, $10 par 370,000 280,000
Retained earnings 145,000 120,000
Total stockholders’ equity 515,000 400,000
Total liabilities and stockholders’ equity$782,250 $712,000
CHAPMAN COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2017
Sales revenue $1,255,250
Cost of goods sold 722,000
Gross profit 533,250
Expenses
Salaries and wages expense 252,100
Interest expense 75,000
Depreciation expense 25,000
Other expenses 8,150
Total expenses 360,250
Operating income 173,000
Income tax expense 43,000
Net income $130,000
The following is additional information concerning Chapman’s transactions during the year ended May 31, 2017.
1. All sales during the year were made on account.
2. All merchandise was purchased on account, comprising the total accounts payable account.
3. Plant assets costing $98,000 were purchased by paying $28,000 in cash and issuing 7,000 shares of stock.
4. The "other expenses" are related to prepaid items.
5. All income taxes incurred during the year were paid during the year.
6. In order to supplement its cash, Chapman issued 2,000 shares of common stock at par value.
7. Cash dividends of $105,000 were declared and paid at the end of the fiscal year.
Prepare a statement of cash flows for Chapman Company for the year ended May 31, 2017, using the direct method. (A reconciliation of net income to net cash provided is not required.) (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Using the indirect method, calculate only the net cash flow from operating activities for Chapman Company for the year ended May 31, 2017. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answer:
$28,250
Explanation:
Chapman Company Statement of Cashflow using Indirect method
Cash flow from Operating Activities:
Net income$130000
Adjustment to reconcile net income to cash basis:
Depreciation expense $25000
Increase Account receivable ($17000)
Decrease Inventory$30000
Increase Prepaid Expense ($2000)
Increase Account payable $8000
Decrease Salaries & Wages Payable ($24750)
Increase Interest payable $2000
Balance $21250
Cash flow from Operating Activities $151250
Cash flow from Investing Activities:
Cash paid for purchase of plant assets ($28000)
Cash flow from Investing Activities ($28000)
Cash flow from Financing Activities:
Issue common stock (2000 * $10)$20000
Repaid Bonds($30000)
Cash dividend paid ($105000)
Cash flow from Financing Activities ($115000)
Net cash Increase/(decrease) $8250
Add: Beginning Cash Balance $20000
Ending Cash Balance $28,250
Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $36,000 and $24,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $45,000.a. What is the amount of a gain or loss on realization?$b. How should the gain or loss be divided between Hewitt and Patel?Hewitt Patel c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0".
Answer:
A. ($15000) Loss
B. Hewitt= $7500, Patel= $7500
C. Hewitt= $28500, Patel= $16500
Explanation:
Workings:
A. Gain/loss = Cash balance-(Hewitt Capital+ Patel Capital)
Gain/loss = $45000-($36000+$24000)
Loss = ($15000)
B.
Hewitt = ($15000*50%) = $7500
Patel = ($15000*50%) = $7500
C. Hewitt Patel
Remaining cash $36000-$7500 $24000-$7500
$28500 $16500
An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called: Multiple Choice Continuous improvement. Customer orientation. Just-in-time manufacturing. Theory of constraints. Total quality management.
Answer:
Just-in-time manufacturing.
Explanation:
A Just in Time (JIT) is a manufacturing control system in which no materials are purchased and no products are manufactured until they are needed.
A primary goal of the JIT production system is to eliminate inventories at every stage of production from raw materials to finished goods.
Raw materials are purchased only when need at some stage of production. Finished Goods are manufactured only as needed to fill customers orders.
Tremendous cost savings have been realized by many companies that have adopted the JIT approach.
A small company that builds wooden fences can currently construct five fences per month for a total revenue of $5,000 and a total cost of $750. One month, the firm owner decides to invest in more equipment. This extra equipment allows the company to build a sixth fence per month, but raises total cost to $825. Assuming the firm charges the same price for the sixth fence as it did for each of the other five, what is the change in total profit that results from increasing output?
Answer:
$925
Explanation:
Initial number of fences = 5
Initial total revenue = $5,000
Initial total cost = $750
Initial total profit = Initial total revenue - Initial total cost = $5,000 - $750 = $4,250
Since the firm charges the same price for the sixth fence as it did for each of the other five, we have:
Price per unit = Initial total revenue / Initial total cost = $5,000 / 5 = $1,000
New number of fences = 6
New total revenue = Price per unit * New number of fences = $1,000 * 6= $6,000
New total profit = $6,000 - $825 = $5,175
Change in total profit = New total profit - Initial total profit = $5,175 - $4,250 = $925.
Therefore, the change in total profit that results from increasing output is $925.
Walther owns a home in flood-prone Paradise Basin. If there is no flood the home and land together will be worth $2100. If there is a flood, Walther's home will be destroyed but the land will still be worth $800. There is 1/10 of chance that Walther's house will be destroyed by the flood. Walther can buy flood insurance for $0.2 per dollar of coverage. Let CF and CNF be the value of respective values of his land in the case of a flood or no flood. Suppose the equation CNF = a - CF/b represents the possible values of CNF and CF that Walther can achieve by buying some amount of insurance. What is the value a +b?
Answer:
a + b = 1,900 - 4 = 1,896
Explanation:
i = amount insured in $
CNF = $2,100 - $0.20i
CF = $800 - $0.20i + i = $800 + $0.80i
CNF = a - CF/b
$2,100 - $0.20i = a - ($800 + $0.80i)/b
$2,100 - $0.20i = a - $800/b - $0.80i/b
now we equate:
-0.2i = 0.8i/b
b = 0.8/-0.2 = -4
2,100 = a - 800/b
2,100 = a - 800/-4
2,100 = a + 200
a = 1,900
a + b = 1,900 - 4 = 1,896
If you advertise and your rival advertises, you each will earn $3 million in profits. If neither of you advertises, you will each earn $7 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $10 million and the non-advertising firm will earn $1 million. If you and your rival plan to be in business for 15 years, then the Nash equilibrium is for:
Answer:
Each company should advertise
Explanation:
Nash equilibrium a concept in game theory which describes the optimal strategy for a party in a non co-operative game. It is the best strategy for the player regardless of what the other player is playing.
In this question, if both parties advertise, they earn $3 million .
If one of you advertises and the other does not, the firm that advertises will earn $10 million and the non-advertising firm will earn $1 million
If neither of you advertises, you will each earn $7 million in profits.
The profits from advertising can either be 3 million or 10 million while the profit from not advertising can either be 7 million or 1 million.
We can see the gains from advertising is more than the gain of not advertising. So the bash equilibrium is to advertise.
Please check the attached image for a table showing this game
I hope my answer helps you
g On July 1, Alton Co. issued an $60,500, 10%, 120-day note payable to Seller Co. Assume that the fiscal year of Alton Co. ends July 31. Using a 360-day year in your calculations, what is the amount of interest expense recognized by Alton in the current fiscal year? When required, round your answer to the nearest dollar.
Answer:
The interest expense is $521
Explanation:
The amount of interest expense for the fiscal year is the interest expense of 31 days which ,in other words the interest incurred only in the month of July ,calculated thus:
interest expense=days in the month/360days*interest rate*loan amount
interest expense=31/360*10%*$60,500=$ 521
The interest expense for the current fiscal year rounded to the nearest dollar amount is $ 521
Tyare Corporation had the following inventory balances at the beginning and end of May: May 1 May 30 Raw materials $ 35,000 $ 49,000 Finished Goods $ 84,500 $ 85,000 Work in Process $ 23,000 $ 17,963 During May, $68,000 in raw materials (all direct materials) were drawn from inventory and used in production. The company's predetermined overhead rate was $12 per direct labor-hour, and it paid its direct labor workers $15 per hour. A total of 490 hours of direct labor time had been expended on the jobs in the beginning Work in Process inventory account. The ending Work in Process inventory account contained $8,000 of direct materials cost. The Corporation incurred $44,850 of actual manufacturing overhead cost during the month and applied $45,300 in manufacturing overhead cost. The actual direct labor-hours worked during May totaled:
$7,700
Explanation:
$18,500 - $6,000 - $4,800 = 7,700
Dome Metals has credit sales of $522,000 yearly with credit terms of net 30 days, which is also the average collection period. Assume the firm adopts new credit terms of 2/10, net 30 and all customers pay on the last day of the discount period. Any reduction in accounts receivable will be used to reduce the firm's bank loan which costs 8 percent. The new credit terms will increase sales by 10% because the 2% discount will make the firm's price competitive. a. If Dome earns 25 percent on sales before discounts, what will be the net change in income if the new credit terms are adopted? (Use a 360-day year.)
Answer:
The net change in income if the new credit terms are adopted would be of $ 3,770
Explanation:
In order to calculate the net change in income if the new credit terms are adopted we would have to make first the following calculations:
New sales after new credit terms = ($522,000*110%)
New sales after new credit terms = $ 574,200
Increase in profit from newsales = (Profit % * New sales)
Increase in profit from newsales = (25%*($574,200-$522.000))
Increase in profit from newsales = $ 13,050
Average accounts receivable balance without discount = (Average collection period*Average daily sales)
Average accounts receivable balance without discount = (30*($522,000/360))
Average accounts receivable balance without discount = $ 43,500
Average accounts receivable balance with discount = (Due in days with discount*Average daily sales)
Average accounts receivable balance with discount = (10*($574,200/360)) Average accounts receivable balance with discount = $ 15,950/.
Reduction in accounts Receivable = ($43,500-$15,950)
Reduction in accounts Receivable = $ 27,550
Interest savings is = (Reduction in accounts receivable*firm's bank loan cost)
Interest savings is = ($27,550*8%)
Interest savings is = $ 2,204
Cost of discount = (Discount rate * Sales) = (2%*$574.200) = $ 11,484/.
Therefore, Net Gain/(Loss) is = (Increase in Profit+Interest savings-Cost of discount)
Net Gain/(Loss) is = ($13,050+$2,204-$11,484)
Net Gain/(Loss) is = $ 3,770
The net change in income if the new credit terms are adopted would be of $ 3,770
Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable.
Answer:
A variance is favorable when the actual costs or actual quantity were lower than estimated.
Explanation:
We weren't provided with enough information to calculate each variance. I will provide with the formulas.
Variable manufacturing overhead rate (cost) variance= (standard rate - actual rate)* actual quantity
Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Fixed overhead spending variance= (actual fixed overhead costs - allocated fixed overhead)
Manufacturing overhead volume variance= (Estimated manufacturing overhead rate*budgeted allocation base) - (Estimated manufacturing overhead rate* Actual amount of allocation base)
A variance is favorable when the actual costs or actual quantity were lower than estimated.
A small fast-food restaurant is automating its burger production. The owner needs to decide whether to rent a machine that can produce up to 2,000 hamburgers per week at a marginal cost of $1 per burger (excluding the cost of ingredients) or another machine that can also make up to 2,000 burgers per week but at a marginal cost of $0.50 per burger (again, excluding the cost of ingredients).
The weekly lease for the machine with the higher marginal cost is $2,300. The weekly lease for the machine with the lower marginal cost is $2,760. The restaurant can sell burgers for $10 per burger, and the cost of ingredients for each burger is $2.
Suppose the restaurant leases the machine with the higher marginal cost for the first week and sells 2,000 burgers that week. The restaurant owner earned profits of $ ___________ in the first week.
Suppose now the restaurant leases the machine with the lower marginal cost for the second week and again sells 2,000 burgers that week. The restaurant owner earned profits of $ _________ in the second week.
Answer:
$11,700 and $12,240
Explanation:
According to the scenario, computation of the given data are as follow:-
Total Revenue = No. of Sale Units × Selling Price Per Unit
= 2,000 × $10
= $20,000
In case if the restaurant lease the machine with the higher marginal cost, restaurant owner earned profits
= Total Revenue - Total Cost
where,
Total cost is is Fixed cost + variable cost
Variable Cost = No. of Sale Units × (Marginal Cost + Cost of Ingredients for Each Burger)
= 2,000 × ($1 + $2)
= $6,000
Total Cost = Fixed Cost + Total Variable Cost
= $2,300 + $6,000
= $8,300
And, the total revenue is $20,000
So, the profit earned is
= $20,000 - $8,300
= $11,700
In case if the restaurant lease the machine with the lower marginal cost, restaurant owner earned profits
= Total Revenue - Total Cost
where,
Total cost is Fixed cost + variable cost
Variable Cost = No. of Sale Units × (Marginal Cost + Cost of Ingredients for Each Burger)
= 2,000 × ($0.50 + $2)
= $5,000
Total Cost = Fixed Cost + Total Variable Cost
= $2,760 + $5,000
= $7,760
And, the total revenue is $20,000
So, the earned profit is
= $20,000 - $7,760
= $12,240
Which statement best describes the trait of being tactful? A. ability to be humble in every situation B. ability to remain stress free C. ability to deal with others, especially in difficult situations D. ability to comply with given instructions E. ability to arrive at work on time
Answer:
C) Tactful means to be sensitive, thoughtful, and just constantly do the right thing each time. Thus, if you are able to deal with others properly, especially in complex and difficult situations, it shows that you are thoughtful of others feelings and do the right thing.
The correct option is C.
What is a tactful personality?
Tact is the ability, to tell the truth, and to consider other people's feelings and reactions. It allows you to give difficult feedback, communicate sensitive information, and say the right thing to preserve relationships.
What is tactful assertiveness?Being tactful means acting with sensitivity and respect. While tact requires a certain amount of thoughtfulness, it doesn't come at the expense of assertiveness. Sometimes assertiveness is incorrectly thought to be the same as aggressiveness.
Learn more about being tactful here https://brainly.com/question/15178364
#SPJ2
features of a cover note
Answer:
It will be:
a) Address and date
b) salutation
c) Body of letter.
d) Conclusion.
Explanation:
The first one is address.
The second one is one's greetings.
The third one is: one's purpose of writing the letter.
The last is the rounding up of the letter.
As a human resources manager three selection measures you could use to select your targeted employees in 5star international resort.
Answer:
Selection measures simply refer to the yardstick that HR Managers or businesses use to make hiring decisions.
Three litmus tests which the successful candidate must pass are:
1. Culture Fit: An International Resort business with a 5-star rating must have gotten there with the right values, and culture. When a candidates attitudes, beliefs and values mirror that of the organisation, they are said to be culture fit.
2. Job Fit: It is the job of the Human Resources manager to ensure that the candidate can do the job. He or she can achieve this by using various recruitment, selection and interview. For a 5 Start International Resort, for instance, the employees must be very people-centric, courteous and display high levels of social and emotional intelligence.
3. Background Checks: Having satisfied the first two criteria, the prospective employees must have strong references and background checks which reveal:
consistency in the information provided during the application process; and good standing with their current and or previous employer/colleagues.
Cheers!
On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the gross method of accounting for sales. Babson pays the invoice on March 17, and takes the appropriate discount. The journal entry that Klein makes on March 17 is:
Answer:
Dr cash $7,644
Dr sales discount $156
Cr accounts receivable $7,800
Explanation:
The cash received is less of a discount of 2% since payment in respect of the sale was received within the discount period.
Cash received=$7,800-($7800*2%)=$ 7,644.00
Discount =$7800-$ 7,644=$156
The accounts receivable would be credited with $7,800 while cash and sales discount would be debited with $7,644 and $156 respectively
816A company purchased $1,900 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $250 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:000-12540-18810-397100
Answer:
Dr accounts payable $1,650
Cr merchandise inventory $33
Cr cash $1,617
Explanation:
After having returned goods worth $250 , the balance of goods in good condition not returned is $1,650 ($1,900-$250).
Paying the balance due on July 12 implies that payment was made during the discount period, hence payment would be net of discount.
Discount=$1,650*2%=$33.
The entries to record the payment would a debit of $1,650 in accounts payable while cash is credit with $1,617 while the $33 discount is credited to merchandise inventory
Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2021 with a refund liability of $340,000. During 2021, Halifax sold merchandise on account for $11,600,000. Halifax's merchandise costs is 75% of merchandise selling price. Also during the year, customers returned $575,000 in sales for credit, with $319,000 of those being returns of merchandise sold prior to 2021, and the rest being merchandise sold during 2021. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the year.
Required:
a. Prepare the entry to record the merchandise returns and the year-end adjusting entry for estimated returns.
b. What is the amount of the year-end allowance for sales returns after the adjusting entry is recorded?
Answer:
1.
2021
Dr sales return $575,000
Cr Refund liability $575,000
2021
Dr Allowance for sales return $340,000
Cr Sales return $340,000
2021
Dr sales returns 345,000
Cr Allowance for sales returns 345,00
2021
Dr Inventory estimated return 258,750
Cr Cost of goods sold 258,750
2. $345,000
Explanation:
Halifax Manufacturing
1.
2021
Dr sales return $575,000
Cr Refund liability $575,000
2021
Dr Allowance for sales return $340,000
Cr Sales return $340,000
2021
Dr sales returns 345,000
($11,600,000×5%)-235,000
580,000-235,000
Cr Allowance for sales returns 345,00
2021
Dr Inventory estimated return 258,750
(345,000×75%)
Cr Cost of goods sold 258,750
2.
Beginning balance $340,000
Less adjustment for last year made ($340,000)
Add current year created $580,000
($11,600,000×5%)
Less Adjustment for current year (235,000)
Ending balance in year end allowance $345,000
(575,000-340,000)
=235,000
The fiscal year ends December 31 for Lake Hamilton Development. To provide funding for its Moonlight Bay project, LHD issued 7% bonds with a face amount of $630,000 on November 1, 2021. The bonds sold for $567,653, a price to yield the market rate of 8%. The bonds mature October 31, 2041 (20 years). Interest is paid semiannually on April 30 and October 31 and is determined using the effective interest method. Required: 1. What amount of interest expense related to the bonds will LHD report in its income statement for the year ending December 31, 2021
Answer:
$7,568.67
Explanation:
The computation of interest expenses is shown below:-
Date Cash payment Effective Increase Balance
interest in balance
11/1/2021 $567,653
30/4/2022 $22,050 $22,706 $656 $568,309
($656 + $567,653)
30/10/2022 $22,050 $22,732 $682 $568,991
30/4/2023 $22,050 $22,760 $710 $569,701
Interest expenses related to the bonds = $22,706 × 2 ÷ 6
= $7,568.67
Working Note :-
Cash Payment = Face amount × Issued bonds percentage × 6 months ÷ 12 months
= $630,000 × 7% × 6 ÷ 12
= $22,050
Effective interest for 30/4/2022 = Sold bonds × Market rate × 6 months ÷ 12 months
= $567,653 × 8% × 6 ÷ 12
= $22,706
Effective interest for 30/10/2022
= $568,309 × 8% × 6 ÷ 12
= $22,732
Effective interest for 30/4/2023
= $568,991 × 8% × 6 ÷ 12
= $22,760
Consider the following scenario:Suppose that Sharon has just finished smoking a cigarette and is thinking about throwing the cigarette butt onto her neighbor Paolo's driveway. Although no police officers are around, she instead decides to carry it to a trash can because she doesn't want to embarrass herself by letting people see her littering.Which of the following types of private solutions to the externality of littering has occurred in this case?(A) Integration of different types of businesses through merger or acquisition(B) Contracts(C) Charities(D) Moral codes and social sanctions
Answer:
Moral codes and social sanctions
Explanation:
Externality is when the actions of a producer or consumer have an effect on third parties not involved in production or consumption.
Externality can be positive or negative.
Postive externality is when the benefits of economic activities to third parties exceeds the costs.
Negative externality is when the costs of economic activities to third parties exceeds the benefits.
Smoking and littering the environment with cigeratte butts is an example of an activity that generates negative externality.
Sharon's morals and sense of judgement cautioned her against littering with her cigarette butts because she knows such activity is frowned against by the society. So, in this case she is guided by her moral codes.
This is one of the solutions to externality.
Other solutions include:
Taxation
Integration of different types of businesses through merger or acquisition
Contracts
Charities
I hope my answer helps you
Crawford Corporation incurred the following transactions.1. Purchased raw materials on account $53,000.2. Raw Materials of $41,800 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $8,700 was classified as indirect materials.3. Factory labor costs incurred were $60,500, of which $50,600 pertained to factory wages payable and $9,900 pertained to employer payroll taxes payable.4. Time tickets indicated that $54,800 was direct labor and $5,700 was indirect labor.5. Manufacturing overhead costs incurred on account were $84,800.6. Depreciation on the company’s office building was $9,000.7. Manufacturing overhead was applied at the rate of 160% of direct labor cost.8. Goods costing $94,200 were completed and transferred to finished goods.9. Finished goods costing $78,200 to manufacture were sold on account for $109,000.Journalize the transactions.
Answer:
1.
Raw Materials $53,000 (debit)
Account Payable $53,000 (credit)
2.
Work In Process : Direct Materials $33,100 (debit)
Work In Process : Indirect Materials $ 8,700 (debit)
Raw Materials $41,800 (credit)
3.
Salaries Expenses $60,500 (debit)
Salaries and Wages Payable $60,500 (credit)
4.
Work In Process : Direct Labor $54,800 (debit)
Work In Process : Indirect Labor $5,700 (debit)
Salaries Expense $60,500 (credit)
5.
Overheads Expenses $84,800 (debit)
Trade Payable $84,800 (credit)
6.
Depreciation - Office Building $9,000 (debit)
Accumulated Depreciation- Office Building $9,000 (credit)
7.
Work In Process $87,680 (debit)
Overheads $87,680 (credit)
8.
Finished Goods $94,200 (debit)
Work In Process $94,200 (credit)
9.
J1
Cost of Goods Sold $78,200 (debit)
Finished Goods $78,200 (credit)
J2
Trade Receivable $109,000 (debit)
Revenue $109,000 (credit)
Explanation:
The Manufacturing Costs accumulate in the Work In Process Account during manufacture.
The Costs is de-recognized from Work In Process Account to Finished Goods Account on transfer to Finished Goods.
The Costs are then de-recognized from Finished Goods to Cost of Sales on Sale to Customers.
Calculation of Overhead Applied :
Overhead = $54,800 × 160% = $87,680.
The following information pertains to the Packer Corporation. Calculate the cost of goods sold for the period:
Beginning Raw Materials $30,000
Ending Raw Materials $70,000
Beginning Work in Process Inventory $40,000
Ending Work in Process Inventory $46,000
Beginning Finished Goods Inventory $72,000
Ending Finished Goods Inventory $68,000
Cost of Goods Manufactured for the period $246,000
a. $250,000.
b. $290,000.
c. $242,000.
d. $246,000.
e. $258,000.
Answer:
COGS= $250,000
Explanation:
Giving the following information:
Beginning Finished Goods Inventory $72,000
Ending Finished Goods Inventory $68,000
Cost of Goods Manufactured for the period $246,000
To calculate the cost of goods sold, we need to use the following formula:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 72,000 + 246,000 - 68,000
COGS= $250,000
Assume an asset cost $72,800 and has a current book value of $42,760. The asset is sold today for $32,900 cash. The firm's tax rate is 21 percent. As a result of this sale, the firm's net cash flow: 1. will increase by more than $32,900. 2. will increase by less than $32,900. 3. will increase by exactly $32,900 4. will decrease by the difference between the $42,760 and the $32,900.
Answer:
As a result of this sale, the firm's net cash flow will increase by more than $32,900. The right option is 1.
Explanation:
According to the given we have the following:
asset cost= $72,800
current book value=$42,760
sale=$32,900
Therefore, loss=current book value-sale
loss=$42,760-$32,900
loss=$9,860
tax saving on loss=$9,860*21%=$2,070.60
Therefore, net cash flow=$32,900+$2,070.60
net cash flow=$34,970.60
As a result of this sale, the firm's net cash flow will increase by more than $32,900
Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase orders, sales invoices, and suppliers’ invoices to prepare journal vouchers for general ledger entries. Each day he posts the journal vouchers to the general ledger and the related subsidiary ledgers. At the end of each month, he reconciles the subsidiary accounts to their control accounts in the general ledger to ensure they balance. Discuss the internal control weaknesses and risks associated with the above process.
Answer:
Segregation of duties
Lack of computerized system
Explanation:
One obvious internal control weakness in the scenario given is segregation of duties. This is defined as the breaking down of a critical line of task into different stages with different individuals handling different stages of the task.
The aim is to prevent error and fraud as the action performed by an individual is subjected to review by another person and as such makes it impossible for an individual to cover up a fraudulent act except there is collision with others .
A computerized system which is the use of accounting software can also be used to integrate the function to increase the accuracy and speed of completion
The risks involved are
Collision with suppliers for a fraudulent acts is made possible through thisIn case of any errors, it can not be easily detectedUntil recently, many developing countries:______.
a. sealed themselves off from foreign investment.
b. were quite open to foreign investment.
c. encouraged foreign portfolio investment but discouraged foreign direct investment.
d. encouraged foreign direct investment but discouraged foreign portfolio investment.
Answer:
a. sealed themselves off from foreign investment.
Explanation:
Traditionally it was believed that foreign direct investment means giving up the country's sovereignty to the foreign nation, on the other hand, the current people see it as a gift to the economy of a country. It becomes a known fact today that the world's economy so closely intertwined, that developing countries have no choice but to accept foreign direct investment. Opening up the domestic markets results in benefits for several nations because they might not have the resources to start profitable operations in these sectors.
Ataxia Fitness center is considering an investment in some additional weight training equipment. The equipment has an estimated useful life of 10 years with no salvage value at the end of 10 years. Ataxia's internal rate of return is 14%. It's discount rate is also 14%. The payback period on this equipment is closest to:___________.
a. 2.70 years
b. 1.90 years
c. 5.22 years
d. 3.70 years
Answer:
6.71 years
Explanation:
Solution
Recall that,
Ataxia Fitness center has an equipment with a useful life estimated to be = 10 years
No Savage value at the end of = 10 years
Internal rate of return of equipment = 8%
rate of discount = 8%
Now,
From the Exhibit 13B-1 and Exhibit 13B-2,
Let the initial outlay be $50000
The present value of inflows at irr be =present value of outflows.
let value of present annuity=Annuity[1-(1+interest rate)^-time period]/rate
Thus,
Be entering the values we get
Annuity[1-(1.08)^-10]/0.08 =50000
5000 =Annuity[1-(1.08)^-10]/0.08
50000=Annuity*6.710081399
Annuity=50000/6.710081399 = =$7451.474435
So, the period of payback =initial outlay/annual cash flows
=(50000/7451.474435)
=6.71 years
Therefore the pay back period on this equipment is = 6.71 years
