Answer:
Statement of retained earnings
For the year ended 2017
Retained earnings, January 1, 2017 $0
Add: Net Income $54,000
Less: Dividends $22,000
Retained earnings, December 31, 2017 $32,000
Statement of retained earnings
For the year ended 2018
Retained earnings, January 1, 2018 $0
Add: Net Income $59,000
Less: Dividends $34,000
Retained earnings, December 31, 2018 $25,000
a. Statement of retained earnings for the year ended 2017 is $32,000.
b. Statement of retained earnings for the year ended 2017 is $25,000.
Statement of retained earnings:
Statement of retained earnings for the year ended 2017
Retained earnings, January 1, 2017 $0
Add Net Income $54,000
Less Dividends ($22,000)
Retained earnings, December 31, 2017 $32,000
($54,000-$22,000)
Statement of retained earnings for the year ended 2018
Retained earnings, January 1, 2018 $0
Add Net Income $59,000
Less Dividends $34,000
Retained earnings, December 31, 2018 $25,000
($59,000-$34,000)
Inconclusion the statement of retained earnings for the year ended 2017 is $32,000 and the Statement of retained earnings for the year ended 2017 is $25,000.
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Joe lost a substantial amount gambling at a race track today. On the last race of the day, he decides to make a large enough bet on a longshot so that, if he wins, he will make up for his earlier losses and break even on the day. His friend Sue, who is up for the day, makes just a small final bet so that she will end up ahead for the day even if she loses the last race. This is typical race track behavior for winners and losers. Would you explain this behavior using over-confidence bias, prospect theory, or some other principle of behavioral economics? Joe and Sue's behavior can be explained by A. the gambler's fallacy because they do not believe past events affect current, independent outcomes. B. overconfidence because they are overconfident they will win on the day's last bet. C. the certainty effect because they place too little weight on outcomes that they consider to be certain relative to risky outcomes. D. the reflection effect because their attitudes toward risk are symmetric for gains and losses. E. prospect theory because they are making decisions relative to their wealth at the start of the day.
Answer:
A. the gamblers fallacy
Explanation:
This is because he is down a lot but he is still going to take the shot.
Estimating Share Value Using the DCF Model Following are forecasts of Whole Foods sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of September 25, 2016.
Reported Horizon Period
$ millions 2016 2017 2018 2019 2020 Terminal Period
Sales $15,724 $15,881 $16,199 $16,523 $16,853 $17,022
NOPAT 526 524 535 545 556 562
NOA 3,466 3,500 3,570 3,642 3,715 3,752
Answer the following requirements assuming a discount rate (WACC) of 6%, a terminal period growth rate of 1%, common shares outstanding of 318.3 million, and net nonoperating obligations (NNO) of $242 million.
(a) Estimate the value of a share of Whole Foods' common stock using the discounted cash flow (DCF) model as of September 25, 2016.
Rounding instructions:
Round answers to the nearest whole number unless noted otherwise. Use your rounded answers for subsequent calculations.
Do not use negative signs with any of your answers.
Reported Forecast Horizon
($ millions) 2016 2017 2018 2019 2020 Terminal Period
Increase in NOA Answer Answer Answer Answer Answer
FCFF (NOPAT - Increase in NOA) Answer Answer Answer Answer Answer
Discount factor [1 / (1 + rw)t ] (Round 5 decimal places) Answer Answer Answer Answer
Present value of horizon FCFF Answer Answer Answer Answer
CUMULATIVE present value of horizon FCFF $ Answer
Present value of terminal FCFF Answer
Total firm value Answer NNO Answer
Firm equity value $ Answer
Shares outstanding (millions) Answer (Round one decimal place)
Stock price per share $ Answer (Round two decimal places)
(b) Whole Foods stock closed at $30.96 on November 18, 2016, the date the 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? What do you believe are some reasons for the difference?
A. Stock prices are a function of many factors. It is impossible to speculate on the reasons for the difference.
B. Our stock price estimate is only a few cents lower than the Whole Foods market price, indicating that we believe that Whole Foods stock is accurately priced. Our stock price estimate is lower than the Whole Foods market price, indicating that we believe that Whole Foods stock is overvalued.
C. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our lower stock price estimate might be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts' model assumptions.
D. Our stock price estimate is lower than the Whole Foods market price, indicating that we believe that Whole Foods stock is undervalued. Stock prices are a function of expected NOPAT and NOA, as well as the WACC discount rate. Our lower stock price estimate might be due to more optimistic forecasts or a lower discount rate compared to other investors' and analysts' model assumptions.
Answer:
Check the explanation for the answer
Explanation:
The price been estimated is bit lower than trading price
The price of the stock is also bit lower with the cents than the whole Foods market price, this indicate that we agree that Whole Foods stock is fixed priced.
Further calculations are been done in the file attached using excel
Which of the following is used to improve real-time collaboration within an organization? Internal social networks Machine learning Neural networks Networks running from a fixed location Computer vision
Answer:
Internal social networks
Explanation:
In simple words, real time collaboration refers to the phenomenon under which an organisation prepares a setup using software as well as virtual technologies so that multiple employees can work together in a single subject a at a very same point of time.
For doing this, organisations generally use internal social networks so that the information remained intact and safe and all the employed individuals can interact with each other effectively.
Current assets for Bush Corporation are $260,000.00 and total assets are $600,000.00. Current liabilities are $170,000.00 and total liabilities are $300,000.00. Included in the current assets are merchandise inventory and prepaid expenses of $25,000.00 and $15,000.00, respectively. What is the acid-test ratio? A. 1.56 B. 0.87
Answer:
The acid test ratio is 1.38
Explanation:
The acid test ratio gives an indication of how easy it is for the company to pay back its short term obligations without considering inventory.
Acid test ratio=current assets-merchandise inventory/current liabilities
current assets is $260,000
current liabilities is $170,000
merchandise inventory is $25,000
acid test ratio=($260,000-$25,000)/$170,000= 1.38
The acid test ratio is 1.38 which is not of the options given
The only that is not as liquid as other current assets is merchandise inventory,hence deducted from current assets.
Presented below are data for Cullumber Company
2020 2021
Assets, January 1 $4220 $5100
Liabilities, January 1 2570 ?
Stockholders' Equity, Jan. 1 ? ?
Dividends 864 634
Common Stock 761 661
Stockholders' Equity, Dec. 31 ? ?
Net Income 855 669
Stockholders' Equity at January 1, 2020 is:_______.
a) $243 loss.
b) $726 income.
c) $180 income.
d) $726 loss.
Answer:
$1,650.
Note: The correct asnwer is $1,650 based on the information provided in the question but it is not included in the option. Kindly confirm this from your teacher.
Explanation:
Stockholders' Equity at January 1, 2020 can be obtained using the accounting equation stated as follows:
Assets = Stockholders' Equity + Liabilities
Since on January 1, 2020, we have:
Assets = $4,220
Stockholders' Equity = ?
Liabilities = $2,570
Substituting the values into the accounting equation above, we have:
$4,220 = Stockholders' Equity + $2,570
Rearranging, we have:
Stockholders' Equity = $4,220 - $2,570 = $1,650
Therefore, Stockholders' Equity at January 1, 2020 is $1,650.
Larry Bar opened a frame shop and completed these transactions:1. Larry started the shop by investing $40,800 cash and equipment valued at $18,800.2. Purchased $150 of office supplies on credit.3. Paid $2,000 cash for the receptionist's salary.4. Sold a custom frame service and collected a $5,300 cash on the sale.5. Completed framing services and billed the client $280.What was the balance of the cash account after these transactions were posted?
Answer:
$44,100
Explanation:
Larry Bar
Investment in Cash - Receptionist's salary+Sales of custom frame = Cash account balance
Investment in Cash $40,800
Paid $2,000 Receptionist's salary $2,000
Sales of custom frame $5,300
Hence:
$40,800-$2,000+$5,300
=$44,100
Cash account balance will be $44,100
A&D Inc. is projecting the following increases and decreases over the next year: Inventory
- increase by $3 million Accounts receivable
- decrease by $2 million Accrued payroll taxes
- increase by $1 million Fixed assets
- increase by $5 million Long term debt
- increase by $4 million Revenues
- increase by $6 million As a result of its projections,
A&D Inc. can expect it's net working capital to:
a. increase by $7 million
b. Increase by $1 million.
c. Decrease by $1 million
d. Not change.
Answer:
The question is is properly formatted ,find below question:
A&D inc is projecting the following increases and decreases over the next year.
Inventory - increases by $3 million
accounts receivable - decrease by $2 million
Accrued payroll taxes - increase by $1 million
fixing assets - increase by $5 million
long term debt - increase by $4 million
revenues - increase by $6 million
The correct option is D,not change
Explanation:
The change in net working capital=change in current assets - change n current liabilities
change in current assets=increase in inventory-decrease in accounts receivable=$3 m-$2m=$1m
Change in current liabilities=increase in payroll taxes=$1m
Change in net working capital=$1m-$1m=$0
The correct option is d,not change since the change in net working capital expected is $0
Option C is wrong because that is change in both current assets and current liabilities respectively
Storytime Park competes with Splash World by providing a variety of rides. Storytime sells tickets at $ 100 per person as a one-day entrance fee. Variable costs are $ 60 per person, and fixed costs are $ 254 comma 000 per month. Compute Storytime Park's contribution margin ratio. Carry your computation to two decimal places. Use the contribution margin ratio approach to determine the sales revenue Storytime Park needs to break even.
Answer:
contribution margin ratio= 0.4
Break-even point (dollars)= $635,000
Explanation:
Giving the following information:
Storytime sells tickets at $ 100 per person as a one-day entrance fee.
Variable costs are $ 60 per person, and fixed costs are $254,000 per month.
To calculate the contribution margin ratio, we need to use the following formula:
contribution margin ratio= contribution margin/selling price
contribution margin ratio= (100 - 60)/100
contribution margin ratio= 0.4
To calculate the sales required to break even, we need to use the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 254,000/0.4
Break-even point (dollars)= $635,000
eCompeteUSA is a competitive video gaming tournament company headquartered in Palo Alto, California. Video game tournaments are organized competitions where multiplayer video games are played for cash prizes of up to $500,000. Gamers and fans are flocking to tournaments both in-person and virtually. Recently, an eSports tournament housed at the Staples Center sold out in under an hour, which surprised even industry insiders.
Answer: Set up a meeting with the VP of marketing and other involved parties to define the problem that needs to be solved.
Explanation:
Here is the complete question:
eCompeteUSA is a competitive video gaming tournament company headquartered in Palo Alto, California. Video game tournaments are organized competitions where multiplayer video games are played for cash prizes of up to $500,000. Gamers and fans are flocking to tournaments both in-person and virtually. Recently, an eSports tournament housed at the Staples Center sold out in under an hour, which surprised even industry insiders.
eSports is gaining popularity worldwide with audience sizes exceeding 134 million. The industryis currently valued at over $747 million, and many predict that the value will top $1.9 billion by 2020.The industry is currently dominated by males (85% male, 15% female) and young people (60% of viewers are under 35 years old). Currently, eCompeteUSA has a relatively small share of the market, but the company feels there are significant opportunities for growth and profitability. You have recently been hired as a research analyst reporting to the VP of Marketing,whose task is to help eCompeteUSA grow its business.
You consider the situation, roll up your sleeves, and get to work. What should be the first step you take in obtaining the information you need to help eCompeteUSA move up in the eSports industry?
a. Examine the secondary sources you have at hand (public and internal databases) to establish exactly what data you already have and what data you need to obtain.
b. Set up a meeting with the VP of marketing and other involved parties to define the problem that needs to be solved.
Solution:
The main objective in the question is to grow eCompeteUSA business. Based on this, the 1st step to take is to define the problem which needs to be solved. Hence, one has to meet with the VP of marketing and every other involved parties.
This is necessary so that every impediments that can affect the growth can be solved. Hence, the first step is to set up a meeting with the VP of marketing and other involved parties to define the problem that needs to be solved.
Carey Company had sales in 2019 of $1,658,800 on 63,800 units. Variable costs totaled $1,148,400, and fixed costs totaled $467,000.A new raw material is available that will decrease the variable costs per unit by 20% (or $3.60). However, to process the new raw material, fixed operating costs will increase by $94,000. Management feels that one-half of the decline in the variable costs per unit should be passed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 5% increase in the number of units sold.
Requried:
a. Prepare a projected CVP income statement for 2020, assuming the changes have not been made.
b. Prepare a projected CVP income statement for 2017, assuming that changes are made as described.
Answer:
Carey Company
a) Projected CVP Income Statement for 2020 (without changes):
Sales $1,658,800
Variable costs 1,148,400
Contribution $510,400
Fixed Costs 467,000
Profit $43,400
b) Projected CVP Income Statement for 2020 (with changes)
Sales $1,621,158
Variable costs 964,656
Contribution $656,502
Fixed Costs 561,000
Profit $95,502
Explanation:
a) Sales units will increase from 63,800 to 66,990 (63,800 x 1.05)
b) Old selling price = $1,658,800/63,800 = $26 per unit
c) New selling price = $26.00 - $1.80 = $24.20 per unit
d) Old variable cost per unit = $1,148,400/63,800 = $18
e) New variable cost per unit = $18 - 3.60 = $14.40
f) Sales Value = $24.20 x 66,990 = $1,621,158
g) Variable costs = $14.40 x 66,990 = $964,656
h) New fixed cost = $467,000 + 94,000 = $561,000
i) A CVP Income Statement is a Cost Volume Profit income statement whereby the costs are identified according to their cost behaviors of whether they are fixed or variable or semi-fixed.
Arkansas Corp. is preparing its statement of cash flows using the indirect method. It provides the following information about transactions for the year: Plant assets, netlong dashbeginning balance: $ 110 comma 000 Plant assets, netlong dashending balance: $ 145 comma 000 Equipment was purchased for $ 65 comma 000 with cash. Equipment with a net asset value of $12,000 was sold for $ 17 comma 000. Depreciation Expense of $ 17 comma 000 was recorded during the year. What was the amount of net cash provided by (used for) investing activities?
Answer:
($48,000)
Explanation:
The computation of net cash provided by investing activities is shown below:-
Cash flow from investing activities
Purchase of Equipment ($65,000)
Sale of Existing Equipment $17,000
Net Cash from Investing activities ($48,000)
As the investing activities recorded those cash transactions which are related to the purchase and sale of long term assets. The purchased is cash outflow as cash is gone so it would be shown in a negative sign while the sale is cash inflow as cash is come so it would be shown in a positive sign
Suppose a company, Re-Tire, has come out with a new approach to solve the problems of punctures. Its new wheel, which is made of steel, allows rubber "tread segments" of tire tread to be bolted directly to the wheel (see image; tire not actual size). No air is required, so the tire can’t go flat, and if one of the segments becomes damaged, the operator using basic hand tools can merely replace the segment without removing the wheel and dismounting and reinstalling the reparied tire. With an ordinary tire, the wheel has to be removed and the tire dismounted at a shop using special tools. The benefit is that the operator can be back to work almost immediately.Assume Re-Tire has a patent on the technology to create the wheel and tread segments, which requires extensive computer simulation in the design of the tread segments. Assume as well that because the technology for creating the rubber segments is less complex than that for air-filled tires, the cost of production for Re-Tire is approximately 20% lower than for regular tires. The steel wheels for the segments are roughly equivalent in cost to those used for regular air-filled tires (the wheels are not interchangeable). Around the world there are about 800,000 skid steer loaders in operation in various industries, and 90% of them use one of just two tire sizes. The replacement tire market for the loaders is over $700 million per year. What price should Re-Tire set for its combination wheel/tread segment product? Assume the standard wheel/air tire combination is $250.
Answer:
The description of the given question is described in the explanation section below.
Explanation:
Throughout my personal view, the cost including its combination wheel/tread sequence good or service should be set at $200 for Re-Tire. As the conventional wheel/air gear combined effect is $250 as well as the level of manufacture besides Re-Tire is about 20% lower than those for frequent tires.The profit of such a 20% reduction costs should be managed to pass forward with employees to gain the start promoting including the latest design and technical method that used produce such tires, and several other costs associated with that as well.The value proposition and perhaps even the accessibility added benefit will surely make clients consider buying but also setting up such tires, and also becoming frequent or long-term buyers of Re-Tire.When the accounts of Daniel Barenboim Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period.
1. The prepaid insurance account shows a debit of $5,280, representing the cost of a 2-year fire insurance policy dated August 1 of the current year.
2. On November 1, Rent Revenue was credited for $1,800, representing revenue from a subrental for a 3-month period beginning on that date.
3. Purchase of advertising materials for $800 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of $290 are on hand.
4. Interest of $770 has accrued on notes payable.
Instructions
Prepare the following in general journal form.
a. The adjusting entry for each item.
b. The reversing entry for each item where appropriate.
Answer:
1. The prepaid insurance account shows a debit of $5,280, representing the cost of a 2-year fire insurance policy dated August 1 of the current year.
Dr Insurance expense 1,100 (= $5,280 x 5/24 months) Cr Prepaid insurance 1,100Five months of insurance expense must be recorded for August - December.
2. On November 1, Rent Revenue was credited for $1,800, representing revenue from a subrental for a 3-month period beginning on that date.
Dr Rent revenue 600 (= $1,800 x 1/3 months) Cr Unearned revenue 600Rent revenue corresponding to January cannot be recorded as earned yet, so it must be recorded as unearned revenue (liability).
3. Purchase of advertising materials for $800 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of $290 are on hand.
Dr Advertising supplies (or materials) 290 Cr Advertising expense 290Unused advertising material is considered an asset that can be used during the next period, the same as any other supplies.
4. Interest of $770 has accrued on notes payable.
Dr Interest expense 770 Cr Interest payable on notes payable 770Accrued interest must be recorded as an expense during the period in which it occurs (accrual principle).
Andy and Kim live together. Andy may invest $14 comma 000 (possibly by taking on an extra job to earn the additional money) in Kim's education this year. This investment will raise Kim's future earnings by $20 comma 000 (in present valueLOADING... terms). If they stay together, they will share the benefit from the additional earnings. However, the probability is 20% that they will split up in the future. If they were married (or in a civil union) and then split, Andy would get half of Kim's additional earnings. If they were living together without any legal ties and they split, then Andy would get nothing. Suppose that Andy is risk neutral. Will Andy invest in Kim's education? Does your answer depend on the couple's legal status? A. Andy will invest in Kim's education only if they have legal ties. B. Andy will not invest in Kim's education regardless of legal ties. C. Andy will invest in Kim's education regardless of legal ties. D. Andy will invest in Kim's education only if they do not have legal ties. E. Andy will be indifferent about investing in Kim's education regardless of legal ties.
Answer:
Will Andy invest in Kim's education?
Yes, he should. The expected benefits from investing in Kim's education are higher than the costs regardless of their legal status.Does your answer depend on the couple's legal status?
C. Andy will invest in Kim's education regardless of legal ties.Explanation:
if Andy and Kim are not married:
initial investment $14,000
expected benefits $20,000 x (1 - 20%) = $16,000
expected gain = $16,000 - $14,000 = $2,000
If Andy and Kim are married:
expected benefits [$20,000 x (1 - 20%)] + ($20,000 x 20% x 1/2) = $16,000 + $2,000 = $18,000
expected gain = $18,000 - $14,000 = $4,000
During April, the first production department of a process manufacturing system completed its work on 355,000 units of a product and transferred them to the next department. Of these transferred units, 71,000 were in process in the production department at the beginning of April and 284,000 were started and completed in April. April's beginning inventory units were 65% complete with respect to materials and 35% complete with respect to conversion. At the end of April, 93,000 additional units were in process in the production department and were 90% complete with respect to materials and 40% complete with respect to conversion. The production department had $1,106,991 of direct materials and $800,823 of conversion costs charged to it during April. Also, its beginning inventory of $207,646 consists of $165,239 of direct materials cost and $42,407 of conversion costs.
1. Compute the direct materials cost per equivalent unit for April. (Round "Cost per EUP" to 2 decimal places.)
2. Compute the conversion cost per equivalent unit for April. (Round "Cost per EUP" to 2 decimal places.)
3. Using the FIFO method, assign April's costs to the department's output-specifically, its units transferred to the next department and its ending work in process inventory. (Round "Cost per EUP" to 2 decimal places.)
Answer:
1. $3.01
2.$2.20
3.
units transferred to the next department = $1,781,006
ending work in process inventory = $333,777
Explanation:
1. direct materials cost per equivalent unit for April.
The first step is to calculate the Total Equivalent units for Direct Materials
To finish opening work in progress ( 71,000 units × 0% ) = 0
Started and Completed during the period ( 284,000 × 100%) = 284,000
Closing Work In Process ( 93,000 × 90%) = 83,700
Total Equivalent units for Direct Materials = 367,700
Then Calculate the cost cost per equivalent unit
Cost per equivalent unit = Current Period Cost / Total Equivalent units
= $1,106,991 / 367,700
= $3.01058
= $3.01
2. conversion cost per equivalent unit for April.
The first step is to calculate the Total Equivalent units for Conversion
To finish opening work in progress ( 71,000 units × 60% ) = 42,600
Started and Completed during the period ( 284,000 × 100%) = 284,000
Closing Work In Process ( 93,000 × 40%) = 37,200
Total Equivalent units for Direct Materials = 363,800
Then Calculate the cost cost per equivalent unit
Cost per equivalent unit = Current Period Cost / Total Equivalent units
= $800,823 / 363,800
= $2.20127
= $2.20
3.assign April's costs to the department's output
Completed and Transferred
Opening Work In Process Cost $207,646
Add To finish Opening Work In Process :
Direct Materials ( 0 × $3.01) $0
Conversion Costs ( 42,600 × $2.20) $93,720
Add Started and Completed Costs (284,000 × $5.21) $1,479,640
Total Cost transferred $1,781,006
Ending Work In Process
Direct Materials ( 83,700 × $3.01) = $251,937
Conversion ( 37,200 × $2.20) = $81,840
Total Cost = $333,777
Indicate how each of the following would shift the (1) marginal-cost curve, (2) average-variable-cost curve, (3) average-fixed-cost curve, and (4) average-total-cost curve of a manufacturing firm. In each case specify the direction of the shift.
a. A reduction in business property taxes.b. An increase in the nominal wages of production workers.c. A decrease in the price of electricity.d. An increase in insurance rates on plant and equipment.e. An increase in transportation costs.
Answer:
a. A reduction in business property taxes: MC-No change; AVC-No change; AFC-Shift down; ATC-Shift down. (Fixed cost)
b. An increase in the nominal wages of production workers: MC-Shift up; AVC-Shift up; AFC-No change; ATC- Shift up. (Variable cost)
c. A decrease in the price of electricity: MC-Shift down; AVC-Shift down; AFC-No change; ATC-Shift down. (Variable cost)
d. An increase in insurance rates on plant and equipment: MC-No change; AVC-No change; AFC-Shift up; ATC-Shift up. (Fixed cost)
e. An increase in transportation costs: MC-Shift up; AVC-Shift up; AFC-No change; ATC-Shift up. (Variable cost)
Explanation:
Where;
MC is the Marginal Cost.
AVC is the Average Variable Cost.
AFC is the Average Fixed Cost.
ATC is the Average Total Cost.
1. Marginal Cost (MC) can be defined as the cost incurred in the production of one unit of a product.
2. Average Variable Cost (AVC) can be defined as the total variable cost per unit of production. It is calculated by dividing total variable cost (TVC) by total output of production (Q);
AVC = \frac{TVC}{Q}
3. Average Fixed Cost can be defined as the fixed cost per unit of production. It is calculated by dividing fixed cost (FC) by total output of production (Q);
AFC = \frac{FC}{Q}
4. Average Total Cost (ATC) can be defined as the overall cost of production divided by total output of production. It is calculated by dividing total cost by total output of production or by adding TVC and TFC.
[tex]ATC = TVC + TFC[/tex]
Vintage Audio Inc. manufactures audio speakers. Each speaker requires $127 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period:
Speaker assembly cell, estimated costs:
Labor $45,050
Depreciation 6,040
Supplies 2,200
Power 1,655
Total cell costs for the period $54,945
The operating plan calls for 185 operating hours for the period. Each speaker requires 20 minutes of cell process time. The unit selling price for each speaker is $344. During the period, the following transactions occurred:
Purchased materials to produce 530 speaker units.
Applied conversion costs to production of 505 speaker units.
Completed and transferred 480 speaker units to finished goods.
Sold 460 speaker units.
There were no inventories at the beginning of the period.
a. Journalize the summary transactions (1)-(4) for the period. Do not round interim calculations.
1.
2.
3.
4. Sale
4. Cost
b. Determine the ending balance of raw and in process inventory and finished goods inventory.
Raw and In Process Inventory, ending balance $
Finished Goods Inventory, ending balance $
Answer:
A.1.
Dr Raw and In Process Inventory 67,310
Cr Accounts Payable 67,310
2
Dr Raw and In Process Inventory 49,995
Cr Conversion cost 49,995
3
Dr Finished goods inventory 108,480
Cr Raw and In Process Inventory 108,480
4a
Dr Accounts receivables 158,240
Cr Sales 158,240
4b
Dr Cost of goods sold 103,960
Cr Finished goods inventory 103,960
b.
Raw and In Process Inventory, ending balance
=$3,540
Finished Goods Inventory, ending balance
= $4520
Explanation:
Solution a:
Budgeted conversion cost per unit =
$54,945 / 185 *20/60
=$297*20/60
= $99 per unit
Vintage Audio Inc. Journal Entries
1.
Dr Raw and In Process Inventory 67,310
Cr Accounts Payable 67,310
(530*$127)
2
Dr Raw and In Process Inventory 49,995
Cr Conversion cost 49,995
(505*$99)
3
Dr Finished goods inventory 108,480
(480*$226)
Cr Raw and In Process Inventory 108,480
4a
Dr Accounts receivables 158,240
(460*$344)
Cr Sales 158,240
4b
Dr Cost of goods sold 103,960
(460*$226)
Cr Finished goods inventory 103,960
b.
Raw and In Process Inventory, ending balance =$54,945+$49,995-$108,480
=$3,540
Finished Goods Inventory, ending balance
$108,480-103,960
= $4520
At the beginning of 2021, Artichoke Academy reported a balance in common stock of $164,000 and a balance in retained earnings of $64,000. During the year, the company issued additional shares of stock for $54,000, earned net income of $44,000, and paid dividends of $11,400. In addition, the company reported balances for the following assets and liabilities on December 31. Assets Liabilities Cash $54,000 Accounts payable $13,600 Supplies 12,300 Utilities payable 5,200 Prepaid rent 31,000 Salaries payable 4,900 Land 270,000 Notes payable 29,000.
Required:
1. Prepare a statement of stockholders’ equity.
2. Prepare a balance sheet.
Answer:
Artichoke Academy
Statement of Stockholders’ Equity
For the Year Ended December 31, 2021
Beginning balance Common Stock $164,000
Beginning balance retained earnings $64,000
Subtotal $228,000
Common Stock issued $54,000
Earned net income $44,000
Distributed dividends ($11,400)
Ending balance Common Stock $218,000
Ending balance retained earnings $96.600
Total Stockholders' Equity December 31, 2021: $314,600
Artichoke Academy
Balance Sheet
For the Year Ended December 31, 2021
Assets:
Cash $54,000
Prepaid rent $31,000
Supplies $12,300
Land $270,000
Total assets: $367,300
Liabilities and stockholders' equity:
Accounts payable $13,600
Utilities payable $5,200
Salaries payable $4,900
Notes payable $29,000
Common stock $218,000
Retained earnings $96,600
Total liabilities and stockholders' equity: $367,300
One year ago, you purchased a newly-issued TIPS bond that has a 6% coupon rate, five years to maturity, and a par value of $1,000. The average inflation rate over the year was 4.2%. What is the amount of the coupon payment you will receive, and what is the current face value of the bond
Answer:
Amount of the coupon payment $62.52
Current face value of the bond $1,042
Explanation:
The bond price, which will be indexed to the inflation rate will be:
$1,000*1.042
= $1,042
The coupon interest payment will be based on the coupon rate as well as the new face value.
Therefore the interest amount will be:
$1,042*.06
= $62.52
A company is set to launch a new product line. At first, only the brand's logo is displayed in various media, without any explanation of what the brand is or what the brand does. Greater familiarity with the logo, in and of itself, tends to make consumers like the brand more. This strategy is known as:
Answer:
Mere exposure effect.
Explanation:
Just as the name sounds "mere exposure", this is explained to be a phenomenon where trust is build on familiarity. Constant usage, constant familiarizing with a particular person, object or product makes a person trust it more than others or its substitutes. This effect according to research and natural order is seen to be psychological that is why the company in the case above used only their logo in all media sampling and other adverts first just to trap the minds of those familiar with their brands before the advert. Simply here, a user can easily trust to buy the new product based on the older products.
Northwest Fur Co. started the year with $92,000 of merchandise inventory on hand. During the year, $425,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Northwest paid freight-in charges of $7,000. Merchandise with an invoice amount of $5,000 was returned for credit. Cost of goods sold for the year was $372,000. What is ending inventory
Answer:
$ 142,800.00
Explanation:
The ending inventory can be computed by rearranging the cost of goods sold formula:
cost of goods sold=Beginning inventory+net purchases-ending inventory
ending inventory=beginning inventory+net purchases-cost of goods sold
beginning inventory is $92,000
Net purchases=purchases-discount+freight-in charges-purchase return
net purchases=$425,000-($425,000*1%)+$7000-($5000*99%)=$422,800.00
cost of goods sold is $372,000
ending inventory=$92,000+$422,800-$372,000=$ 142,800.00
If inventory is being valued at cost and the price level is steadily rising, which of the three costing methods (FIFO, LIFO, weighted-average) will yield the lowest annual income tax expense?
Answer:
LIFO
Explanation:
It will be the one that give higher Cost of goods sold. We also know that:
Cost of goods sold = Opening Inventory + Inventory Purchases - Closing Inventory
So this means the lower the closing inventory the higher the cost of goods sold and in time of price increases it will be more appropriate to use LIFO method which will reduce the Closing Inventory and this will increase the cost of goods sold and thus decrease in profit. This reduced profit means that the tax expense will also be lower in value.
Similarly the second attractive option will be the Weighted Average and the least attractive option would be FIFO costing method.
Identify Postings from Cash Payments Journal
Using the following cash payments journal, identify each of the posting references, indicated by a letter, as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that No posting is required.
CASH PAYMENTS JOURNAL Page 46
Date Ck.No. Account Debited Post.Ref. Other AccountsDr. Accounts Payable Dr. Cash Cr.
20Y1
July 3 611 Energy Systems Co. (a) 4,000 4,000
July 5 612 Utilities Expense (b) 310 310
July 10 613 Prepaid Rent (c) 3,200 3,200
July 16 614 Flowers to Go, Inc. (d) 1,250 1,250
July 19 615 Advertising Expense (e) 640 640
July 22 616 Office Equipment (f) 3,600 3,600
July 25 617 Echo Co. (g) 5,500 5,500
July 26 618 Office Supplies (h) 250 250
July 31 619 Salaries Expense (i) 1,750 1,750
July 31 9,750 10,750 20,500
(j) (k) (l)
Answer:
Explanation:
The general ledger shows the record for every financial transaction which an organization does. The subsidiary ledger is just used to support the general ledger control account as it gives vital informations on sales, discounts, etc.
Based on the above explanation, the references, indicated by the letter will be posted thus:
a. This will be posted to the subsidiary ledger account.
b. This will be posted to the general ledger account.
c. This will be posted to the general ledger account.
d. This will be posted to the subsidiary ledger account.
e. This will be posted to the general ledger account.
f. This will be posted to the general ledger account.
g. This will be posted to the subsidiary ledger account.
h. This will be posted to the general ledger account
i. This will be posted to the general ledger account.
j. For this, there will be no posting required.
k. This will be posted to the general ledger account.
l. This will be posted to the general ledger account
Jetz is the leading manufacturer of personal computers. In a recent year, it reported the following in dollars in millions: Net sales revenue $ 76,131 Cost of sales 59,344 Beginning inventory 1,760 Ending inventory 1,860 Required: Determine the inventory turnover ratio and average days to sell inventory for the current year. (Use 365 days a year. Round your intermediate calculations and final answers to 2 decimal places.)
Answer:
Results are below.
Explanation:
Giving the following information:
Net sales revenue $ 76,131
Cost of sales 59,344
Beginning inventory 1,760
Ending inventory 1,860
First, we need to calculate the average inventory:
Average inventory= (beginning inventory + ending inventory)/2
Average inventory= (1,760 + 1,860)/2
Average inventory= 1,810
Now, the inventory turnover ratio:
inventory turnover ratio= cost of goods sold/ average inventory
inventory turnover ratio= 59,344/1,810
inventory turnover ratio= 32.79
Finally, the average days to sell inventory:
average days to sell inventory= 365/inventory turnover
average days to sell inventory= 365/32.79
average days to sell inventory= 332.21 days
The risk-free rate is 7%. The expected market rate of return is 15%. If you expect a stock with a beta of 1.3 to offer a rate of return of 12%, you should Group of answer choices sell the stock short because it is underpriced. buy the stock because it is underpriced. sell short the stock because it is overpriced. None of the options, as the stock is fairly priced. buy the stock because it is overpriced.
Answer: Sell short the stock because it is overpriced.
Explanation:
To find out if the stock is overpriced or underpriced, you would need to check to see if the Expected return is indeed 12%.
With the given variables you can do this with the Capital Asset Pricing Model.
The formula is,
Er = Rf + b(Rm + Rf)
Where,
Er is the expected return
Rf is the Risk free rate
b is the Beta
Rm is the Market Rate
Inserting the figures,
= 7% + 1.3(15% - 7%)
= 17.4%
The stock should have an expected return of 17.4% but only has an expected return of 12%. It is underperforming and is therefore OVERPRICED. To benefit from this you should sell the stock short so that when the market prices adjust you can make a profit.
Performance Bike Co. is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:
Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31.
Performance Bike Co.
Estimation of Uncollectible Accounts
December 31
Age Interva l Balance Estimated Uncollectible Estimated Uncollectible
Accounts Percent Accounts Amount
Not past due $890,000 3/4% $
1-30 days past due 97,900 2%
31-60 days past due 44,500 6%
61-90 days past due 32,000 16%
91-180 days past due 23,100 40%
Over 180 days past due 16,900 65%
Total $1,104,400
Answer:
$36,648
Explanation:
age balance % uncollectible total
Not past due $890,000 3/4% $ 6,675
1-30 days past due $97,900 2% $ 1,958
31-60 days past due $44,500 6% $2,670
61-90 days past due $32,000 16% $ 5,120
91-180 days past due $23,100 40% $ 9,240
Over 180 days past due $16,900 65% $10,985
Total $1,104,400 $36,648
journal entry should be:
December 31, 202x, bad debt expense
Dr Bad debt expense 36,648
Cr Allowance for doubtful accounts 36,648
Direct Materials Variances The following data relate to the direct materials cost for the production of 10,000 automobile tires: Actual: 145,000 lbs. at $2.80 per lb. Standard: 150,000 lbs. at $2.75 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Materials Price Variance $ Direct Materials Quantity Variance $ Total Direct Materials Cost Variance $ b. The direct materials price variance should normally be reported to the . If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the . If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the .
Answer:
direct materials price variance = $7,250
direct materials quantity variance = - $13,750
total direct materials cost variance = - $6,500
The direct materials price variance should normally be reported to the Purchasing Manager.
Variance in direct materials used would be reported to the Production Manager
The favorable variance caused by purchase of higher-quality raw materials would be reported to Purchasing Manager
Explanation:
direct materials price variance = (Aq × Ap) - (Aq × Sp)
= (145,000 × $2.80) - (145,000 × $2.75)
= $7,250 A
direct materials quantity variance = (Aq - Sp) - (Sq × Sp)
= (145,000 × $2.75) - (150,000 × $2.75)
= $13,750 F
total direct materials cost variance = direct materials price variance + direct materials quantity variance
= $7,250 A + $13,750 F
= $6,500 F
The direct materials price variance should normally be reported to the Purchasing Manager.
Variance in direct materials used would be reported to the Production Manager
The favorable variance caused by purchase of higher-quality raw materials would be reported to Purchasing Manager
Note
Variances are reported to responsible managers.
Sheffield Corp. began operations on April 1 by issuing 52,500 shares of $4 par value common stock for cash at $15 per share. In addition, Sheffield issued 2,600 shares of $1 par value preferred stock for $3 per share. Journalize the issuance of the common and preferred shares.
Answer:
1. For Common Stock issued:
Debit cash for $787,500
Credit Common Stock for $210,000
Credit Paid-In Capital in Excess of Par- Common Stock for $577,500
2. For Preferred Stock Issued:
Debit cash for $7,800
Credit Preferred Stock for $2,600
Credit Paid-In Capital in Excess of Par- Preffered Stock for $5,200
Explanation:
Note: See the attached excel file for how the journal entries will look exactly in the book.
Before journalizing the issuance, the following calculations are done first:
Cash received form common stock issued = 52,500 * $15 = $787,500
Common stock issued par value = 52,500 * $4 = $210,000
Paid-In Capital in Excess of Par- Common Stock = $787,500 - $210,000 = $577,500
Cash received form preferred stock issued = 2,600 * $3 = $7,800
Preferred stock issued par value = 2,600 * $1 = $2,600
Paid-In Capital in Excess of Par- Preferred Stock = $7,800 - $2,600 = $5,200
A corporate bond has a face value of $1,000 and a coupon rate of 9.5%. The bond matures in 12 years and has a current market price of $1,100. If the corporation sells more bonds it will incur flotation costs of $48 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital
Answer:
5.71%
Explanation:
The after tax cost of debt=pretax cost of debt*(1-t)
where t is the tax rate of 35% or 0.35
pretax cost of debt=yield to maturity
The yield to maturity can be determined using rate formula in excel as below:
=rate(nper,pmt,-pv,fv)
nper is the number of coupon interest payable by the bonds i.e 12 coupons in 12 years
pmt is the annual coupon=$1000*9.5%=$95
pv is the current market price-flotation cost=$1,100-$48=$1052
fv is the face value of $1000
=rate(12,95,-1052,1000)=8.78%
After tax cost of debt=8.78% *(1-0.35)=5.71%
Paul Company had 100,000 shares of common stock outstanding on January 1, 2016. On September 30, 2016, Paul sold 50,000 shares of common stock for cash. Paul also had 11,000 shares of convertible preferred stock outstanding throughout 2016. The preferred stock is $100 par, 5%, and is convertible into 3 shares of common for each share of preferred. Paul also had 520, 8%, convertible bonds outstanding throughout 2016. Each $1,000 bond is convertible into 30 shares of common stock. The bonds sold originally at face value. Reported net income for 2016 was $320,000 with a 40% tax rate. Common shareholders received $2.20 per share dividends after preferred dividends were paid in 2016. RequiredCompute basic and diluted earnings per share for 2016. (Round your answers to 2 decimal places.)
Answer:
basic earnings per share (EPS) = $2.36
diluted EPS = $1.64
Explanation:
weighted average common stocks:
January 1: 100,000 shares x 12/12 = 100,000
September 30: sold 50,000 shares x 3/12 = 12,500
total 112,500
net income = $320,000
preferred dividends = $100 x 5% x 11,000 = $55,000
diluted shares:
preferred stocks = 11,000 x 3 = 33,000
convertible bonds = 520 x 30 = 15,600
total 48,600
basic earnings per share (EPS) = (net income - preferred dividends) / weighted average shares = ($320,000 - $55,000) / 112,500 = $2.36
diluted EPS = (net income - preferred dividends )/ (weighted average shares + convertible preferred stocks + convertible bonds) = ($320,000 - $55,000) / (112,500 + 48,600) = $1.64
