Prepare Natura Co.’s journal entries to record the following transactions involving its short-term investments in held-to-maturity debt securities, all of which occurred during the current year. a. On June 15, paid $120,000 cash to purchase Remed’s 90-day short-term debt securities ($120,000 principal), dated June 15, that pay 5% interest. b. On September 16, received a check from Remed in payment of the principal and 90 days' interest on the debt securities purchased in transaction a. (Use 360 days in a year. Do not round your intermediate calculations.)
Answers
Answer: The answer has been attached below.
Explanation:
A journal entry is the record of the business transactions in an accounting books of a business. It is the first step in accounting cycle. The journal details all the financial transactions of a business. The accounts are either recorded in the credit or the debit side of accountings.
The calculation has been attached. Kindly note that the interest was gotten thus:
= 120,000 × 5% × 90/360
= 120,000 × 0.05 × 0.25
= 1500
The journal entry for the whole transactions has been attached.
Related Questions
Explain whether the Statement of Cash Flows is able to illustrate the ‘liquidity’ of an entity to its users and provide ONE recommendation how companies can maintain liquidity during this pandemic.
Answers
Answer:
A cash flow is an important part of an organisation. it helps in understanding the cash flows from investing, operating and financial activities.
A cash flow statement helps in evaluating the liquidity of a company.
During the current Pandemic, maintaining liquidity is very important.
some business functions freezes. such firm will experience cash operating cots. the firm should have enough cash to maintain the business in moving forward.
Explanation:
Solution
A cash flow statement is a vital parts or components provided by an organisation.i t helps in interpreting the cash flows from investing, operating and financial activities or functions.
An organisation income statement is made ready based on the accrual basis and so it does help or aid in the understanding the movement of cash during.
A cash flow statement helps in evaluating the liquidity of a company.
Operating activities of cash flows is computed or estimated by putting Non cash expense to net income and then deducting current liabilities and assets.
Cash flow from operating activities are necessary to the firm because it helps in providing cash to invest assets and payback of debt.
Maintaining liquidity during the present pandemic has become very necessary.
Since business functions freezes, the firm will experience cash operating cots. hence the firm should have sufficient cash to maintain the business running.
The firm can also take a loo at their current assets to see if it can be converted to cash on quickly basis.
You are evaluating two different silicon wafer milling machines. The Techron I costs $285,000, has a three-year life, and has pretax operating costs of $78,000 per year. The Techron II costs $495,000, has a five-year life, and has pretax operating costs of $45,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $55,000. If your tax rate is 24 percent and your discount rate is 11 percent, compute the EAC for both machines.
Answers
Answer:
EAC Techron I = -$141,050
EAC Techron II = -$138,181
Explanation:
Techron I costs $285,000, has a three-year life, and has pretax operating costs of $78,000 per year. Salvage value $55,000, use straight line depreciation.
annuity factor = [1 - 1/(1 + r)ⁿ] / r = [1 - 1/(1 + 0.11)³] / 0.11 = 2.4437
depreciation expense per year = ($285,000 - $55,000) / 3 = $76,667
cash outflow years 1 and 2 = [($78,000 + $76,667) x (1 - 24%)] - $76,667 = ($154,667 x 0.76) - $76,667 = $40,880
cash outflow year 3 = [($78,000 + $76,667) x (1 - 24%)] - $76,667 - $55,000 = ($154,667 x 0.76) - $76,667 - $55,000 = -$14,120
NPV = -285,000 - 40,880/1.11 - 40,880/1.11² + 14,120/1.11³ = -285,000 - 36,829 - 33,179 + 10,324 = -344,684
EAC = NPV / annuity factor = -344,684 / 2.4437 = -$141,050
Techron II costs $495,000, has a five-year life, and has pretax operating costs of $45,000 per year. Salvage value $55,000, use straight line depreciation.
annuity factor = [1 - 1/(1 + r)ⁿ] / r = [1 - 1/(1 + 0.11)⁵] / 0.11 = 3.6959
depreciation expense per year = ($495,000 - $55,000) / 5 = $88,000
cash outflow years 1 through 4 = [($45,000 + $88,000) x (1 - 24%)] - $88,000 = ($133,000 x 0.76) - $88,000 = $13,080
cash outflow year 5 = [($45,000 + $88,000) x (1 - 24%)] - $88,000 - $55,000 = ($133,000 x 0.76) - $88,000 - $55,000 = -$41,920
NPV = -495,000 - 13,080/1.11 - 13,080/1.11² - 13,080/1.11³ - 13,080/1.11⁴ + 41,920/1.11⁵ = -495,000 - 11,784 - 10,616 - 9,564 - 8,616 + 24,877 = -510,703
EAC = NPV / annuity factor = -510,703 / 3.6959 = -$138,181
Crane Company purchased equipment on January 1 at a list price of $120000, with credit terms 4/10, n/30. Payment was made within the discount period. Crane paid $4750 sales tax on the equipment and paid installation charges of $2100. Prior to installation, Crane paid $5600 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment
Answers
Answer:
The cost of equipment = $127,650
Explanation:
According to International Accounting Standards (IAS) 16, property plants and equipment, the cost of land includes all of the cost necessary to bring and make it ready for the intended use.
These costs include purchase cost, fees and commission associated with the purchase transaction.
Here in this question the installation charges, sales taxes and the cost of concrete slab all fall within the definition of IAS 16
The quotation 4/10, n/30 implies that if payment is made within =10 days, Crane would get 4% off the initial purchase price.
Since the payment was made within the discounted period, the net purchase price would be
Purchase price = 120,000 - (4%× 120,000)= 115,200
The cost of equipment = 115,200 +4,750 + 2,100 + 5600= 127650
The cost of equipment = $127,650
Juhasz Corporation makes a product with the following standards for direct labor and variable overhead: Standard Quantity or HoursStandard Price or Rate Direct labor 0.40hours$29.00per hour Variable overhead 0.40hours$4.90per hour In August the company produced 8,800 units using 3,700 direct labor-hours. The actual variable overhead cost was $17,020. The company applies variable overhead on the basis of direct labor-hours. The variable overhead efficiency variance for August is:
Answers
Answer: -882
Explanation:
A variable overhead efficiency variance is simply defined as the actual labor hours less the budgeted labor hours which is then multiplied by the hourly rate for the standard variable overhead. It should be note that the standard variable overhead consist of the indirect labor costs like the security and the shop foreman.
Bases on the explanation above, the variable overhead efficiency will be:
= [(8800 × 0.40) - 3700] × 4.90
= -882
This is an unfavorable variance which means that the number of actual hours worked is more than the budgeted hours.
Debit CreditCash $2,870 Accounts Receivable $3,231 Supplies 800 Equipment 3,800 Accounts Payable 2,666 Unearned Service Revenue 1,200 Common Stock 6,000 Retained Earnings 3,000 Service Revenue 2,380 Salaries and Wages Expense 3,400 Office Expense 940 Totals $13,371 $16,91Each of the listed accounts should have a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors.1. Cash received from a customer on account was debited for $570, and Accounts Receivable was credited for the same amount. The actual collection was for $750.2. The purchase of a computer printer on account for $500 was recorded as a debit to Supplies for $500 and a credit to Accounts Payable for $500.3. Services were performed on account for a client for $890. Accounts Receivable was debited for $890 and Service Revenue was credited for $89.4. A payment of $65 for telephone charges was recorded as a debit to Office Expense for $65 and a debit to Cash for $65.5. When the Unearned Service Revenue account was reviewed, it was found that service revenue amounting to $325 was performed prior to June 30 (related to Unearned Service Revenue).6. A debit posting to Salaries and Wages Expense of $670 was omitted.7. A payment on account for $206 was credited to Cash for $206 and credited to Accounts Payable for $260.8. A dividend of $575 was debited to Salaries and Wages Expense for $575 and credited to Cash for $575.
Answers
Answer:
TRIAL BALANCE
Assets:
Cash $2,920
Accounts Receivable $3,051
Supplies $300
Equipment $4,300
Total assets 10,571
Liabilities + Stockholders' Equity
Accounts Payable $2,200
Unearned Service Revenue $875
Common Stock $6,000
Retained Earnings $1,496
Total liabilities + stockholders' equity 10,571
Explanation:
1.Cash received from a customer on account was debited for $570, and Accounts Receivable was credited for the same amount. The actual collection was for $750.
Dr Cash 180
Cr Accounts receivable 180
2. The purchase of a computer printer on account for $500 was recorded as a debit to Supplies for $500 and a credit to Accounts Payable for $500.
Dr Equipment 500
Cr Supplies 500
3. Services were performed on account for a client for $890. Accounts Receivable was debited for $890 and Service Revenue was credited for $89.
Dr Accounts receivable 0
Cr Service revenue 801
4. A payment of $65 for telephone charges was recorded as a debit to Office Expense for $65 and a debit to Cash for $65.
Dr Office expense 0
Cr Cash 130
5. When the Unearned Service Revenue account was reviewed, it was found that service revenue amounting to $325 was performed prior to June 30 (related to Unearned Service Revenue).
Dr Unearned service revenue 325
Cr Service revenue 325
6. A debit posting to Salaries and Wages Expense of $670 was omitted.
Dr Wages expense 670
Cr Cash 0
7. A payment on account for $206 was credited to Cash for $206 and credited to Accounts Payable for $260.
Dr Accounts payable 466
Cr Cash 0
8. A dividend of $575 was debited to Salaries and Wages Expense for $575 and credited to Cash for $575.
Dr Retained earnings 575
Cr Wages expense 575
Service Revenue 2,380 + 801 + 325 = 3,506
Salaries and Wages Expense 3,400 + 670 - 575 = 3,495
Office Expense 940
net loss -929
Cash $2,870 + 180 - 130 = 2,920
Accounts Receivable $3,231 - 180 = 3,051
Supplies 800 - 500 = 300
Equipment 3,800 + 500 = 4,300
Accounts Payable 2,666 - 466 = 2,200
Unearned Service Revenue 1,200 - 325 = 875
Common Stock 6,000
Retained Earnings 3,000 - 575 - 929 = 1,496
Problem 15-1A Production costs computed and recorded; reports prepared LO C2, P1, P2, P3, P4
[The following information applies to the questions displayed below.]
Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $510,000, and factory payroll cost in April is $365,000. Overhead costs incurred in April are: indirect materials, $53,000; indirect labor, $27,000; factory rent, $32,000; factory utilities, $20,000; and factory equipment depreciation, $53,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April. Costs of the three jobs worked on in April follow.
Job 306 Job 307 Job 308
Balances on March 31
Direct materials $ 25,000 $ 40,000
Direct labor 25,000 18,000
Applied overhead 12,500 9,000
Costs during April
Direct materials 131,000 205,000 $105,000
Direct labor 105,000 152,000 101,000
Applied overhead ? ? ?
Status on April 30
Finished (sold) Finished (unsold)
In process
Problem 15-1A Part 1
Required:
Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).
Answers
Answer:
Job No 306 351,000 Cost Of Goods Sold
Job No 307 500,000 Finished Goods Inventory
Job No 308 256,500 Work In Process Inventory
Explanation:
We add the March balance and the April balances for each of the jobs to get the desired results.
Marcelino Co
Job No 306
March
Direct Materials 25000
Direct Labor 25000
Applied Overhead 12500
Opening Work In Process 62500
April
Direct Materials 131000
Direct Labor 105000
Applied Overhead (50% of 105,000) 52,500
Total Costs Added In April 288500
Total Costs 351,000
Status on April 30 Finished & Sold
Included in Cost Of Goods Sold
Job No 307
March
Direct Materials 40000
Direct Labor 18000
Applied Overhead 9000
Opening Work In Process 67,000
April
Direct Materials 205000
Direct Labor 152000
Applied Overhead (50% of 152,000) 76,000
Total Costs Added In April 433,000
Total Costs 500,000
Status on April 30 Finished & Unsold
Included in Finished Goods Inventory
Job No 308
March
Direct Materials ------
Direct Labor --------
Applied Overhead -------
Opening Work In Process ------
April
Direct Materials 105000
Direct Labor 101000
Applied Overhead (50% of 101,000) 50,500
Total Costs Added In April 256,500
Total Costs 256,500
Status on April 30 In Process
Included in Work In Process Inventory
Assume that you have the following decision-making options: (1) make the decision on your own with available information, (2) consult others before making a decision, and (3) call a meeting and reach a consensus, seeking to arrive at a final decision everyone can agree on. Which approach would you use to make each of the following decisions and why?
You are the leader of a new product development project. Your team has worked hard on developing a third-generation product that incorporates new technology and meets customer demands. The project is roughly 50 per- cent complete. You have just received a report from the marketing depart- ment detailing a similar product that is about to be released by a competitor. The product appears to utilize radical new design principles that expand the functionality of the product. This poses a serious threat to the success of your project. Top management is considering canceling your project and starting over again. They want you to make a recommendation.
Answers
Answer:
(2) consult others before making a decision.
Before I make a recommendation, I will consult my team members. Individually, some may have new ideas and modifications which we can incorporate into the project to even beat the competition and cause management to continue supporting the project.
Explanation:
Even though our competitor's "product appears to utilize radical new design principles that expand the functionality of the product," we can still modify our product. This will not only incorporate the features of our competitor's product, but also further introduce new features that will emanate from the challenge from competition.
This is where the SCRUM framework becomes important. This framework for project management emphasizes teamwork, accountability, and iterative progress toward a well-defined goal, while allowing for tweaks.
Developing this project based on this framework must have made it possible for us to receive the report from the marketing department in the first place. The principles of Scrum are Openness, Respect, Courage, Commitment, and Focus. So, the best we can do will be to prioritize, come up with new improvement ideas, and convince top management not to cancel the project.
Match the following statements to the appropriate terms. Segregation of duties. select the appropriate term Cash that is not available for general use, but instead is limited to a particular purpose. select the appropriate term Two or more employees circumventing prescribed procedures. select the appropriate term Prevent a transaction from being recorded more than once. select the appropriate term Checks which have been returned by the maker's bank for lack of funds. select the appropriate term Checks which have been paid by the depositor's bank. select the appropriate term A projection of anticipated cash flows. select the appropriate term Anything that a bank will accept for deposit. select the appropriate term Physical control devices. select the appropriate term A basic principle of cash management. select the appropriate term Insurance protection against misappropriation of assets. select the appropriate term Document indicating the purpose of a petty cash expenditure. select the appropriate term Issued checks that have not been paid by the bank. select the appropriate term Highly liquid investments.
Answers
Answer and Explanation:
The matching of the following statements to the appropriate terms :
1. Segregagtion of duties = Property custody should be kept away from keeping records of such assets
2. Cash that is not available for general use, but instead is limited to a particular purpose = Restricted cash as it is used for specific purpose not for the general purpose
3. Two or more employees circumventing prescribed procedures = Collusion. It means there is a secret agreement in view to deceived others or mislead others
4. Prevent a transaction from being recorded more than once = Prenumbered documents. It means the documents like recepits, checks, invoices that are to be accounted which reduced the unauthorized transactions
5. Checks which have been returned by the maker's bank for lack of funds. = NSF checks. It is a non sufficent fund which represents that the account have does not contain sufficent funds
6. Checks which have been paid by the depositor's bank = Cancelled checks. The checks which are cancelled due to insufficent balance or any other reason
7. A projection of anticipated cash flows.= Cash budget. It records all cash receipts and all cash payments related to the business transactions
8. Anything that a bank will accept for deposit = Cash. Cash is a more liquid assets that is shown in the current assets side of the balance sheet
9. Physical control device = Televison monitors, sensors, etc. These are the devices which are physically controlled
10. A basic principle of cash management = Invest idle cash. It refers to the cash which is not earned any value or neither it increased the value
11. Insurance protection against misappropriation of assets = Bonding employees. This refers to protect employees against any losses, theft, etc
12. Document indicating the purpose of a petty cash expenditure = Petty cash recipts. It refers how much cash is used till date, etc
13. Issued checks that have not been paid by the bank = Outstanding checks. For this the treatment is that we have to show this in a negative sign while computing the adjsuted balance of bank balance
14. Highly liquid investments = Cash equiivalent. This include cash in hand, cash at bank, marketable securities which shows the highly liquid investment and the same is shown in the current asset side of the balance sheet
RT Renovations is organized with two service departments (S1 and S2) and two production departments (P1 and P2). The company uses the step method to allocate service department costs, allocating from S1 to S2, P1, and P2 first. The cost accountant tells you that in November, $104,000 was allocated from S2 to P1 (including any cost allocated from S1 to S2). She also tells you that $54,000 was allocated from S1 to S2 in November.P1 used 25 percent of S2 services and P2 used 75 percent of S2 services in November. Finally, S2 used 40 percent of S1 services in November.Required:a. What are the total costs incurred by S1 in November? (Do not round intermediate calculations.)b. What are the total costs incurred by S2 (before any allocations) in November? (Do not round intermediate calculations.)
Answers
Answer:
a. $135,000
b. $362,000
Explanation:
a. The computation of the total costs incurred by S1 in November is shown below:
= costs assigned by S1 to S2 ÷ percentage of S1 services used by S2
= $54,000 ÷ 40%
= $135,000
b. The total cost incurred by S2 before any allocations is
= (costs assigned by S2 to P1 ÷ percentage of S2 services used by P1) - costs assigned from S1 to S2
= ($104,000 ÷ 25% - $54,000)
= $416,000 - $54,000
= $362,000
For the next nine questions, use the data in the following tables for an economy that produces only two things, bread and computers. Assume that all production is consumed in each year:
Year 1
Good Quantity Price
Bread 30 $10
Computers 10 $50
Year 2
Good Quantity Price
Bread 40 $15
Computers 15 $60
1. Using the chain weighted method, and selecting year 1 as a base, what is real GDP in year 2?
2. Using the chain weighted method, and selecting year 2 as a base, what is real GDP in year 2?
Answers
Answer:
1. Using the chain weighted method, and selecting year 1 as a base, what is real GDP in year 2?
$1,1502. Using the chain weighted method, and selecting year 2 as a base, what is real GDP in year 2?
$1,500Explanation:
When you use the chain weighted method, you must multiply the base year's price times the current quantities to determine real GDP.
Year 1 Year 2
Quantity Price Quantity Price
Bread 30 $10 40 $15
Computers 10 $50 15 $60
real GDP in year 2 using year 1 as base = (15 x $50) + (40 x $10) = $750 + $400 = $1,150
real GDP in year 2 using year 2 as base = (15 x $60) + (40 x $15) = $900 + $600 = $1,500
Using a LIFO perpetual cost flow, calculate the value of the ending inventory and the cost of goods sold for the month of November of Beamer Company using the data below.
Nov 1 Purchased 600 units $80 each
Nov 4 Sold 200 units
Nov 11 Purchased 350 units $82 each
Nov 12 Sold 275 units
Nov 22 Purchased 175 units $84 each
Nov 23 Sold 155 units
Calculate the following:
Inventory valuation at the end of November
Answers
Answer:
Ending inventory= $39,830
Explanation:
Giving the following information:
Company using the data below.
Nov 1 Purchased 600 units $80 each
Nov 4 Sold 200 units
Nov 11 Purchased 350 units $82 each
Nov 12 Sold 275 units
Nov 22 Purchased 175 units $84 each
Nov 23 Sold 155 units
Under the LIFO (last-in, first-out) method, the ending inventory cost is calculated using the cost of the firsts units incorporated. Using the perpetual method, the company identifies the cost with each specific unit.
Ending inventory in units= total units - units sold= 495 units
COGS:
Nov 4= 200*80= 16,000
Nov 12= 275*82= 22,550
Nov 23= 155*84= 13,020
Ending inventory= 400*80 + 75*82 + 20*84= $39,830
The annual accounts payable is 4,800; the annual revenue is 75,000, and the gross profit margin is 40%. The payable days estimated from the data above is ______. Review Later 29 46 39
Answers
Answer:
Estimated Payable Days = 39
Explanation:
Given:
Annual account Payable = 4,800
Annual revenue = 75,000
Gross profit margin = 40%
Find:
Payable days
Computation:
Annual expense = Annual revenue(1-Gross profit margin)
Annual expense = 75,000(1-0.4)
Annual expense = 45,000
Estimated Payable Days = [4,800 × 365] / 45,000
Estimated Payable Days = 39
Quantas Industries sold $300,000 of consumer electronics during January under a one-year warranty. The cost to repair defects under the warranty is estimated at 6% of the sales price. On June 20, a customer was given $183 cash under terms of the warranty. Journalize the entry to record (a) the estimated warranty expense on January 31 for January sales on page 10 of the journal and (b) the June 20 warranty work on page 14 of the journal. Refer to the Chart of Accounts for exact wording of account titles.
Answers
Answer:
January 31.
Warranty Expense $18,000 (debit)
Warranty Provision $18,000 (credit)
June 20.
Warranty Provision $183 (debit)
Cash $183 (credit)
Explanation:
There is no option on the customer to take the warranty or not. There this type of Warranty is known as an Assurance Type Warranty.
Assurance type warranties are accounted in terms of the Provision Standards as follows ;
Entry when the warranty is granted
Warranty Expense $18,000 (debit)
Warranty Provision $18,000 (credit)
Being recognition of warranty cost and provision.
Warranty Expense $300,000 × 6% = $18,000
When the Warranty Claim is subsequently received.
Warranty Provision $183 (debit)
Cash $183 (credit)
Being utilization of Provision when the warranty claim is received.
A team has prepared and estimate for what it can get accomplished in a Sprint. The Product Owner has wanted more to get accomplished in the upcoming Sprint and wants the Team to take on an additional user story. What should the ScrumMaster do in response to this conflict?
Answers
Answer: ScrumMaster should ask the Product Owner which other User Story they would like to give up in exchange for the one they want to add for this upcoming Sprint.
Explanation:
The options to the question are:
a. ScrumMaster should replan the Product Backlog and propose better user stories to address in the Sprint.
b. ScrumMaster should ask the Product Owner which other User Story they would like to give up in exchange for the one they want to add for this upcoming Sprint.
c. Stay out of the way as this is not the ScrumMaster's job to resolve.
d. ScrumMaster should ask the team to take the story on and work overtime.
From the question, we are informed that a team has prepared an estimate for what it can get accomplished in a Sprint and that the Product Owner has wanted more to get accomplished in the upcoming Sprint and therefore wants the team to take on an additional user story.
The best way to tackle this conflict is for the ScrumMaster should ask the Product Owner which other User Story they would like to give up in exchange for the one they want to add for this upcoming Sprint. Since an estimate has already been prepared, taking an additional user story will bring about an overestimation. Therefore, to being the right track, the thing to do is to actually give up a user story for the new one to be added.
OS Environmental provides cost-effective solutions for managing regulatory requirements and environmental needs specific to the airline industry. Assume that on July 1 the company issues a one-year note for the amount of $5.0 million. Interest is payable at maturity. Required:Determine the amount of interest expense that should be recorded in a year-end adjusting entry under each of the following independent assumptions: (Enter your answers in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)Find the interest expense:interest rate fiscal year-end interest expense12% december 31 =10% September 30 =9% october 31 =6% january 31 =
Answers
Answer: The answers are given below
Explanation:
December 31 has interest rate = 12 % Interest expense will be:
= 5 000 000 × (12/100) × (6 /12)
= 5 000 000 × 0.12 × 0.5
= $ 300,000
September 30 has interest rate = 10 % Interest expense will be:
= 5 000 000 × (10/100) × (3/12)
= 5 000 000 × 0.10 × 0.25
= $ 125,000
October 30 has interest rate = 9% Interest expense will be:
= 5 000 000 × (9/100) × (4/12)
= 5 000 000 × 0.09 × 0.33
= $ 150,000
January 31 has interest rate = 6% Interest expense will be:
= 5 000 000 × (6/100) × (7/12)
= 5 000 000 × 0.06 × 0.583
= $ 175,000
QS 11-6 Recording employer payroll taxes LO P3 Merger Co. has 10 employees, each of whom earns $1,550 per month and has been employed since January 1. FICA Social Security taxes are 6.2% of the first $128,400 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Prepare the March 31 journal entry to record the March payroll taxes expenses. (Round your answers to 2 decimal places.)
Answers
Answer:
March 31, 202x, payroll tax expenses
Dr FICA tax (OASDI) expense 961
Dr FICA tax (Medicare) expense 224.75
Dr FUTA tax expense 93
Dr SUTA tax expense 837
Cr FICA tax (OASDI) payable 961
Cr FICA tax (Medicare) payable 224.75
Cr FUTA tax payable 93
Cr SUTA tax payable 837
Explanation:
Since we are calculating only payroll taxes, the wages expense is not included in this journal entry.
total payroll for the 10 employees = 10 x $1,550 = $15,500
each employee has accumulated earnings of $1,550 x 3 = $4,650
Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted cash balance per books on May 31. Cash balance per books, 5/31 $3,398 Deposits in transit 202 Notes receivable and interest collected by bank 983 Bank charge for check printing 26 Outstanding checks 1,694 NSF check 175
Answers
Answer:
$4,180
Explanation:
Cash balance per books (May 31) $3,398
Notes receivable and interest collected by bank $983
Bank fees ($26)
NSF check ($175)
total reconciled cash balance per books = $4,180
Outstanding checks and deposits in transit are used to reconcile bank accounts, not the firm's cash account.
A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000.
Required A Required B
Cash Flow Select Chart Amount * PV Factor = Present Value
Annual Cash Flow Present Value of an Annuity of 1
Residual value Present Value of 1
Present value of cash inflows
Immediate Cash Flow
Net Present Value
A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation.
Required A Required BCash Flow Select Chart Amount * PV Factor = Present Value Annual Cash Flow Present Value of an Annuity of 1Residual value Present Value of 1 Present value of cash inflows Immediate Cash Flow Net Present Value
Assume the company requires a 10% rateo return on its vestments. Compute the net present value of each potential investment.
Answers
Answer:
a. $509,141
b. $189,495
Explanation:
The computation of the net present value for each case is shown below:
a.
Net present value = Present value after considering the discount rate and salvage value - initial investment
where,
Present value is
= Incremental after tax income + depreciation expense
= $150,000 + ($520,000 - $10,000) ÷ 6 years
= $150,000 + $85,000
= $235,000
Now PVIFA factor at 6 years for 10% is 4.3553
So, present value is
= $235,000 × 4.3553
= $1,023,496
For salvage value, the present value is
= $10,000 × 0.5645 (Discounting factor)
= $5,645
So, total present values is
= $1,023,496 + $5,645
= $1,029,141
And, the initial investment is $520,000
So, the net present value is
= $1,029,141 - $520,000
= $509,141
b.
Net present value = Present value after considering the discount rate and salvage value - initial investment
where,
Present value is
= Incremental after tax income + depreciation expense
= $60,000 + ($380,000 - $20,000) ÷ 8 years
= $60,000 + $45,000
= $105,000
Now PVIFA factor at 6 years for 10% is 5.3349
So, present value is
= $105,000 × 5.3349
= $560,164.50
For salvage value, the present value is
= $20,000 × 0.4665 (Discounting factor)
= $9,330
So, total present values is
= $560,164.50 + $9,330
= $569,494.50
And, the initial investment is $380,000
So, the net present value is
= $564,494.50 - $380,000
= $189,495
On June 3, Marigold Company sold to Chester Company merchandise having a sale price of $2,200 with terms of 4/10, n/60, f.o.b. shipping point. An invoice totaling $97, terms n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost. On June 12, the company received a check for the balance due from Chester Company.
Prepare journal entries on the Sage Company books to record all the events noted above under each of the following bases.
a. Sales and receivables are entered at gross selling price.
b. Sales and receivables are entered at net of cash discounts.
Answers
Answer:
A.
Jun 3
Dr Account receivable 2,200
Cr Sales 2,200
Jun 12
Dr Cash 2,112
Dr Sales discount 88
Cr Account receivable 2,200
B.
Jun 3
Dr Account receivable 2,112
Cr Sales discount 2,112
Jun 12
Dr Cash 2,112
Cr Account receivable 2,112
Explanation:
Marigold Company Journal entries
A.
Jun 3
Dr Account receivable 2,200
Cr Sales 2,200
Jun 12
Dr Cash 2,112
(2,200-88)
Dr Sales discount 88
(2,200*4%)
Cr Account receivable 2,200
B.
Jun 3
Dr Account receivable 2,112
Cr Sales discount 2,112
(2,200*96%)
Jun 12
Dr Cash 2,112
Cr Account receivable 2,112
100%-4%=96%
The owner of Miller Restaurant is disappointed because the restaurant has been averaging 7,500 pizza sales per month but the restaurant and wait staff can make and serve 10,000 pizzas per month. The variable cost (for example, ingredients) of each pizza is $1.55. Monthly fixed costs (for example, depreciation, property taxes, business license, manager's salary) are $12,000 per month. The owner wants cost information about different volumes so that some operating decisions can be made.REQUIREMENTS:1) Fill in the following chart to provide the owner with the cost information. Then use the completed chart to help you answer the remaining questions:Monthly pizza volume 6,000 7,500 10,000 Total fixed costs Total variable costs Total costs Fixed cost per pizza Variable cost per pizza Average cost per pizza Selling price per pizza S 6.25 S 6.25 S 6.25 Average profit per pizza2) From a cost standpoint, why do companies such as Miller Restaurant want to operate near or at full capacity?3) The owner has been considering ways to increase the sales volume. The owner thinks that 10,000 could be sold per month by cutting the selling price per pizza from $6.25 to $5.75. How much extra profit (above the current level) would be generated if the selling price were to be decreased? (HINT: Find the restaurant's current monthly profit and compare it to the restaurant's projected monthly profit at the new sales price and volume.)
Answers
Answer: The answer is provided and attached below.
Explanation:
The explanation for number 1 and 3 has been attached.
2. The break even point is level of production whereby a company makes no profit or loss. When a company operates below the break even point, the company makes a loss and when a company operates above this level, the company make a profit. The higher the level, the higher the profit.
Therefore, from a cost point of view, Miller restaurant and every other company wants to operate at the full or near full capacity in order to earn higher level of profit. At this point, the fixed costs have been recovered, and every additional unit makes up the profit of the company.
On October 31, Legacy Rocks Inc., a marble contractor, issued for cash 400,000 shares of $10 par common stock at $18, and on November 19, it issued for cash 50,000 shares of preferred stock, $75 par at $80. a. Journalize the entries for October 31 and November 19. For a compound transaction, if an amount box does not require an entry, leave it blank.
Answers
Answer and Explanation:
The journal entries are shown below:
On Oct 31
Cash (400,000 × $18) $7,200,000
To Common stock (400,000 × $10) $4,000,000
To Paid in capital in excess of par value - common stock $3,200,000
(Being the issuance of the common stock is recorded)
For recording this we debited the cash as it increased the assets and credited the common stock and paid in capital as it also increased the stockholder equity
On Nov 19
Cash (50,000 × $80) $4,000,000
To Preferred stock (50,000 × $75) $3,750,000
To Paid in capital in excess of par value - Preferred stock $250,000
(Being the issuance of the preferred stock is recorded)
For recording this we debited the cash as it increased the assets and credited the common stock and paid in capital as it also increased the stockholder equity
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results:
Sales (30,000 balls) $750,000
Variable expenses 450,000
Contribution margin 300,000
Fixed expenses 210,000
Net operating income 90,000
Required:
1A. Compute the CM ratio and the break-even point in balls.
1B. Compute the the degree of operating leverage at last year.
2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $3 per ball next year. If this change takes place and the selling price per ball remains con- stant at $25, what will be the new CM ratio and break-even point in balls?
3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $90,000, as 5. last year? The president feels that the company must raise the sell- ing price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs?
4. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls?
Refer to the data in (5) above.
A. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $90,000, as last year?
B. Assume the new plant is built and that next year the company manufactures and sells 30,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.
C. If you were a member of top management, would you have been in favor of constructing the new plant? Explain.
Answers
Answer:
1A. Compute the CM ratio and the break-even point in balls.
CM ratio = 2.5break even point = 21,000 balls1B. Compute the degree of operating leverage at last year.
31.82%2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $3 per ball next year. If this change takes place and the selling price per ball remains constant at $25, what will be the new CM ratio and break-even point in balls?
CM ratio = 3.57break even point = 30,000 balls3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $90,000, as 5. last year? The president feels that the company must raise the sell- ing price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs?
42,858 ballsnew price of $28 per ball4. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls?
CM = 1.3226,250 ballsA. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $90,000, as last year?
31,875 balls
B. Assume the new plant is built and that next year the company manufactures and sells 30,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage.
Income Statement
Total revenue $750,000
Variable expenses $270,000
Contribution margin $480,000
Fixed expenses $420,000
Net operating income $60,000
Degree of operating leverage = 60.87%
C. If you were a member of top management, would you have been in favor of constructing the new plant?
If you cannot avoid paying the salary raise, then the company needs to carry on the new plant project.
Explanation:
sales price per ball = $25
variable expenses: $15 per unit
direct labor $9other variable costs $6CM ratio = net sales / CM = $750,000 / $300,000 = 2.5
break even point = total fixed costs / CM per unit = $210,000 / $10 = 21,000 balls
degree of operating leverage = fixed costs / total costs = $210,000 / $660,000 = 31.82%
new CM ratio = net sales / CM = $750,000 / $210,000 = 3.57
break even point = total fixed costs / CM per unit = $210,000 / $7 = 30,000 balls
sales level for $90,000 profit = ($210,000 + $90,000) / $7 = 42,857.14 ≈ 42,858 balls
CM ratio (new plant) = net sales / CM = $750,000 / $570,000 = 1.32
break even point = total fixed costs / CM per unit = $420,000 / $16 = 26,250 balls
sales level for $90,000 profit = ($420,000 + $90,000) / $16 = 31,875 balls
Two design alternatives A and B have the following cash flows. Each alternative has 30-year life at a 5% interest rate. Alternative A Alternative B Initial Cost $700,000 $950,000 Annual Benefits $80,000 $120,000 Annual Operating Cost $20,000 $30,000 Using incremental B/C ratio to select the best alternative. Which of the following statements is TRUE?
A. Incremental B/C ratio is 1.52 and Alternative A should be selected.
B. Incremental B/C ratio is 1.52 and Alternative B should be selected.
C. Incremental B/C ratio is 0.66 and Alternative B should be selected.
D. Incremental B/C ratio is 0.66 and Alternative A should be selected.
Answers
Answer:
Incremental B/C ratio is 1.46 and Alternative B should be selected.
Explanation:
Alternative A
Annual net benefit = Annual Benefit - Annual Operating Cost
=80,000 - 20,000
=$60,000
Present Value of all future cash flow = Annual net benefit * PV factor {PVIFA = (1 - (1 + r)^-n) / r}
=60,000 * PVIFA (5%, 30years)
=60,000 * 15.372
=$922,320
Incremental B/C= Present Value of all future cash flow / Initial Cost / Initial Cost
=922,320 / 700,000
=1.3176
Alternative B
Annual net benefit = Annual Benefit - Annual Operating Cost
=120,000 - 30,000
=$90,000
Present Value of all future cash flow = Annual net benefit * PV factor {PVIFA = (1 - (1 + r)^-n) / r}
=90,000 * PVIFA (5%, 30years)
=90,000 * 15.372
=$1,383,480
Incremental B/C= Present Value of all future cash flow / Initial Cost / Initial Cost
=1,383,480 / 950,000
=1.4562
Conclusion: Because Alternative B has higher ratio than the Alternative A, it should be chosen.
Selected financial information for Thornton Company for 2019 follows: Sales $ 2,000,000 Cost of goods sold 1,400,000 Merchandise inventory Beginning of year 159,000 End of year 200,000 Required Assuming that the merchandise inventory buildup was relatively constant, how many times did the merchandise inventory turn over during 2019? (Round your answer to 2 decimal places.)
Answers
Answer:
7.80 times
Explanation:
First of all we have to calculate the average inventory
Opening inventory= 159,000
Closing inventory= 200,000
Average inventory= (opening inventory+closing inventory)/2
= ( 159,000+200,000)/2
= 359,000/2
= 179,500
The next step is to find the merchandise inventory turnover which is calculated as
= Cost of goods/ Average inventory
Cost of goods= $1,400,000
Average inventory= 179,500
= 1,400,000/179,500
= 7.799 times
= 7.80 times (to 2 decimal places)
Hence the merchandise inventory was turned over 7.80 times in 2019
Answer: 7.80 times
Explanation:
The Merchandise Inventory Formula can be calculated with the Inventory Turnover Ratio which aims to measure how often a company is able to change inventory over a period. The purpose being to see if the company in question is carrying enough Inventory per period.
The formula for this is,
= Cost of Goods sold / Average Inventory
Average Inventory = (Beginning Inventory + Ending Inventory ) / 2
= (159,000 + 200,000) / 2
= 359,000/2
= $170,500
Therefore,
Inventory Turnover Ratio = 1,400,000/170,500
= 7.7994
= 7.80
The Merchandise was turned over 7.80 times in 2019.
In the Stackelberg model, the leader has a firstminusmover advantage because it A. has lower costs than the follower. B. reacts to the follower's decision. C. differentiates its output. D. chooses its output to manipulate the follower to produce the output that most benefits the leader.
Answers
Answer:
D. chooses its output to manipulate the follower to produce the output that most benefits the leader.
Explanation:
Strackelberg model is one where a market leader makes the first move and then the other followers firms follow sequentially.
For this model to be successful, the followers need to observe the leader and follow their lead in a production process or venture.
The market leader usually has an advantage that enables it make the first move.
For example a firm that has a monopoly in a market leads while new entrants follow.
In this model the market leader chooses an output and manipulates the followers to produce the same output, and this benefits the leader
The River Falls Company has two divisions. The Cutting Division prepares timber at its sawmills. The Coating Division prepares the cut lumber into finished wood for the furniture industry. No inventories exist in either division at the beginning of 20X5. During the year, the Cutting Division prepared 60,000 cords of wood at a cost of $720,000. All the lumber was transferred to the Coating Division, where additional operating costs of $5 per cord were incurred. The 600,000 boardfeet of finished wood were sold for $2,500,000.
Required:
a. Determine the operating income for each division if the transfer price from Cutting to Assembly is at cost - $11 a cord.
b. Determine the operating income for each division if the transfer price is $9 per cord.
c. Since the Cutting Division sells all of its wood internally to the Assembly Division, does the manager care what price is selected? Why? Should the Cutting Division be a cost center or a profit center under the circumstances?
Answers
Answer:
a) Operating income at the cost of $11 is $660,000
b) Operating income at the cost of $9 is $540,000
c) Yes, the manager care what price is selected. The Cutting Division be a cost center.
Explanation:
a) Cutting Assembly
Revenue $660,000 $2,500,000
Cost of services
Incurred $660,000 $360,000
Transferred-in $0 $660,000
Total $660,000 $1,020,000
Operating income $0 $1,480,000
Operating income at the cost of $11 = 60,000 cords × $11 = $660,000
b) Cutting Assembly
Revenue $540,000 $2,500,000
Cost of services
Incurred $660000 $360,000
Transferred-in $0 $540,000
Total $660000 $900,000
Operating income ($120,000) $1,600,000
Operating income at the cost of $9 = 60,000 cords × $9 = $540,000
In September 2000 the Pullman Group arranged a bond issue for the estate of the late Marvin Gaye. The collateral on the bonds (and source of cash flow for interest and principal payments) consisted of future royalties from classic songs such as "What's Going On," and "I Heard It Though The Grapevine." The bond issue had a $1,000 face value and a coupon rate of 5%. If the bond matures in 26 years, pays semiannual coupons, and the yield to maturity is 6%, what will the bond sell for
Answers
Answer:
The bond will sell for the amount of $869.17
Explanation:
According to the given data coupon amount = 50/2 = 25
Therefore, in order to calculate the selling price of the bond we would have to make the following calculation:
selling price of the bond = 25 * PVIFA(3%,52) + 1,000 * PVIF(3%,52)
selling price of the bond= 25 * 26.1662 + 1,000 * 0.2150
selling price of the bond= $869.17
The bond will sell for the amount of $869.17
The bond will sell for $869.17, if the bond matures in 26 years, pays semiannual coupons, and the yield to maturity is 6%.
What is the present value of annuity factor?PVIFA is an abbreviation of the Present Value Interest Factor of Annuity. It is an idea based on the time value of money; the money you have now is worth more than the same amount of money a few years from now.
As per the given information:
[tex]\rm\,By \;the \; amount \;of \;coupon \;data \; provided \; = \dfrac{50}{2} = \$25[/tex]
Therefore, in order to calculate the selling price of a bond we will need to do the following calculations:
[tex]\rm\,Bond \; sale \;price = 25 \times PVIFA (3\%, 52) + 1,000 \times PVIF (3\%, 52)\\\\Bond sale price = 25 \times 26.1662 + 1,000 \times 0.2150\\\\ Bond sale price = \$869.17[/tex]
Hence, the bond will sell for $869.17
To learn more about present value of annuity factor, refer:
https://brainly.com/question/25792915
Consider two ways to protect your car from theft. The Club is a conspicuous steering wheel lock that makes it difficult for a thief to take a car. Lojack is a secret tracking system that makes it easier for police to catch a thief who steals a car on which it is installed.
If a car thief encounters a car with the Club and a car without it, the car with the Club imposes a________externality on the car without the Club. A policy implication of this result is a______those who use the Club.
If a car thief encounters two cars without the Club, but the car thief fears a Lojack system might be installed in one of the cars, the car with the Lojack system imposes a_______externality on the other car. A policy implication of this result is a_______those who use the Lojack technology.
Answers
Answer and Explanation:
According to the given situation,
The car with the club enforces on the car without the club a negative externality if a robber experiences a car with the club and a car without them. A policy implication of that result is a tax on those who use the club.
If a car thief reaches two cars even without club, however the car thief is afraid to build a lojack system in one of cars, the car with the Lojakc system forces on the other car positive externality. A resulting policy consequence is a subsidy for those who use the Lojack system.
A company reported net income of $6 million. During the year the average number of common shares outstanding was 3 million. The price of a share of common stock at the end of the year was $5. There were 400,000 shares of preferred stock outstanding on average and no dividends were declared and the preferred stock is noncumulative. The Price/Earnings Ratio is approximately:
a. $0.40.b. $1.76.c. $1.86.d. $2.00.
Answers
Answer:
The correct answer is $2.5, but it is not included in the option.
Explanation:
Earning per share (EPS) = Net income / Average number of common shares outstanding = $6,000,000 / 3,000,000 = $2 per share
Common stock market price per share (MPS) = $5
Price/Earnings Ratio = MPS / EPS = $5 / $2 = $2.5
The correct answer is $2.5.
Describe at least three exchange rate factors that are likely to attract foreign investors to a country's currency. Explain why these factors are attractive to foreign investors.
Answers
Answer: 1. High Interest
2. Low Government Debt
3. Political Stability
Explanation:
Foreign Investors are Investors and investors always like to invest where there are prospects of growth and profit.
High Interest Rates give them the opportunity to invest their money in a currency that will give them a great return because a country where there are high interest rates imparts this on its currency which causes it to rise in value thereby giving currency holders a capital gain.
Another factor is Government Debt. A country with high Government debt will typically be unable to raise funds through the bond market easily. This shortage of funds can lead to inflation which devalues currency causing foreign currency investors to flee.
Finally there is the Political Factor (other factors exist). A stable country politically stands a better chance of maintaining a higher value currency that one with lower political stability. This is because political Stability attracts investors and as more investments come into a country, this reflects in its currency by making it stronger which will attract foreign currency investors.
