Answer:
$1,402,500
Explanation:
AMOS COMPANY Statement of Retained EarningsFor Year Ended December 31, 2017
Retained earnings, December 31, 2016 $1,375,000
Prior period adjustment:
Depreciation expense error in 2015 (55,500)
Adjusted retained earnings, December 31, 2016 $1,319,500
($1,375,000-55,500)
Add: Net income 126,000
Less:Cash Dividends(43,000)
Retained earnings, December 31, 2017 $1,402,500
shelhorse Corporation produces and sells a single product. Data concerning that product appear below:Per UnitPercent of Sales Selling price$240100% Variable expenses6025% Contribution margin$18075% Fixed expenses are $364,000 per month. The company is currently selling 5,900 units per month. Required: The marketing manager believes that a $21,000 increase in the monthly advertising budget would result in a 130 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change
Answer:
Effect on income= $2,400 increase
Explanation:
Giving the following information:
Selling price= $240
Variable expenses= $60
Contribution margin= $180
Fixed expenses= $364,000 per month.
The company is currently selling 5,900 units per month.
The marketing manager believes that a $21,000 increase in the monthly advertising budget would result in a 130 unit increase in monthly sales.
First, we need to calculate the actual income:
Actual income= 5,900*180 - 364,000= $698,000
Now, the income with changes:
Income= 6,030*180 - 385,000= $700,400
Effect on income= $2,400 increase
Some of E and S Electronics's merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is $ 22,000 below the business's cost of the goods, which was $ 100,000. Before any adjustments at the end of the period, the company's Cost of Goods Sold account has a balance of $ 390,000.
Requirements:
1. Journalize any required entries.
2. At what amount should the company report merchandise inventory on the balance sheet?
3. At what amount should the company report cost of goods sold on the income statement?
4. Which accounting principle or concept is most relevant to this situation?
Answer:
Explanation:
1. The journal entry has been attached.
2. The company report merchandise inventory on the balance sheet as:
= $100,000 - $22,000
= $78,000
This is because, when using the market value method, it should be noted that the inventories will be written down to their market value when it is is lower than inventory cost and in situations whereby the market value is higher than inventory cost, there will be no effect given.
3. The company should report cost of goods sold on the income statement as:
= $390000+$22000
= $412,000
4. The accounting principle of conservatism is used here. Conservatism is a policy whereby companies predict possible future losses but they do not anticipate the future gains. It is used by companies on order to play safe. This can be seen here as we wrote down the inventory value when market value is lower than inventory cost.
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.
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
The following transactions are February activities of Swing Hard Incorporated, which offers golfing lessons in the northeastern United States. Swing Hard collected $20,600 from customers for lesson services provided in February. Swing Hard sold a gift card for golf lessons for $155 cash in February. Swing Hard received $2,300 from credit sales made to customers in January. Swing Hard collected $2,300 in advance payments for golf lessons to start in June. Swing Hard billed a customer $180 for services provided between February 25 and February 28. The bill is to be paid in March. Swing Hard paid $2,600 for wages to its golf instructors for the month of February. Swing Hard paid $2,500 for electricity used in the month of January. Swing Hard received an electricity bill for $1,420 for the month of February, to be paid in March.Required 1. Prepare an income statement for Swing Hard Incorporated for the month ended February 28. (This income statement would be considered "preliminary" because it uses unadjusted balances.)2. What is company's net profit margin expressed as a percent?
Answer:
Income Statement for Swing Hard Incorporated for the month ended February 28.
Sales $20,935
Less Expenses
Wages ($2,600)
Electricity ($1,420)
Net Income / (Loss) $16,915
Net profit margin = 80.8%
Explanation:
Income Statement for Swing Hard Incorporated for the month ended February 28.
Sales ($20,600 + $155 + $180) $20,935
Less Expenses
Wages ($2,600)
Electricity ($1,420)
Net Income / (Loss) $16,915
Company's net profit margin
Net profit margin = net profit / sales × 100
= $16,915 / $20,935 × 100
= 80.8%
Note
The Income Statement is always prepared on accrual basis of accounting meaning Revenues and Expenses must the recorded when they occur or incur not as when they are paid.
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
The risk-free rate of interest is 4% and the market risk premium is 7%. Hughes Corporation has a beta of 1.3, and last year generated a return of 11% with a standard deviation of returns of 15%. The required return on Hughes Corporation stock is:
Answer:
13.10%
Explanation:
Required return = Risk-free rate + (Beta * Market risk premium) ...... (1)
Where;
Required return = ?
Risk-free rate = 4%, or 0.04
Beta = 1.3
Market risk premium = 7%, or 0.07
Substitute the values into equation (1), we have:
Required return = 0.04 + (1.3 * 0.07) = 0.1310, or 13.10%
Therefore, the required return on Hughes Corporation stock is 13.10%.
Marigold Corp. has outstanding 77000 shares of 5% preferred stock with a $10 par value and 145600 shares of $3 par value common stock. Dividends have been paid every year except last year and the current year. If the preferred stock is cumulative and nonparticipating and $252900 is distributed, the common stockholders will receive _________.
Answer:
$ 175,900.00
Explanation:
Yearly preferred stock dividends=number of preferred shares*dividend percentage*par value
yearly preferred stock dividends=77,000*5%*$10=$ 38,500.00
Since preferred stock is cumulative it implies that dividends in arrears for last year must be paid alongside this year dividends
dividends to preferred stock=$ 38,500*2=$77,000.00
common stockholders' dividends=total dividends-preferred stock dividends=$252,900-$77,000=$ 175,900.00
Determine the future value of the following single amounts (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1).
a. 13,000
b. 18,000
c. 31,000
d. 52,000
Question
Determine the future value of the following single amounts (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1).
i n
a. 13,000 5 % 18
b. 18,000 8 % 14
c. 31,000 8% 12
d. 52,000 6% 9
Answer:
Future Value
a = 31,286.05
b. = 52,869.48
c = 78,063.27
d. = 87,852.90
Explanation:
The future of a single sum can be determined as follows:
FV = PV × (1+r)^n
FV- Future value , PV - Present Value , r- rate of return per period , number of period
Future Value
a 13,000× (1.05)^18 = 31,286.05
b. 18,000× (1.08)^14 = 52,869.48
c 31,000 × 1.08^ 12 = 78,063.27
d. 52,000 × 1.06^9 = 87,852.90
For the year ending December 31, 2020, Splish Brothers Inc. reports net income $133,000 and cash dividends $90,000. Determine the balance in retained earnings at December 31 assuming the balance in retained earnings on January 1, 2020, was $230,000. (List items that increase retained earnings first.) Splish Brothers Inc. Retained Earnings Statement December 31, 2020 Balance, January 1 $ Less : Net Income / (Loss) Less : Dividends Balance, December 31 $
Answer:
Therefore retained earnings at December 31 is $273,000
Explanation:
Items that increase retail earnings include:
Beginning balance
Net income
Cash dividends
Beginning balance as at January 1,2020 = $ 230,000
Net income = $ 133,000
Cash dividends = ($90,000)
Therefore, retained earnings = Beginning balance + Net income -Cash dividends
= $230,000 + $133,000 - $90,000
= $ 273,000
Positive Messages and the Writing Process
Organizations exchange information internally and externally. External messages go to customers, vendors, the government, and other business partners. Internal messages travel upward to supervisors, downward to employees, and horizontally among workers. Understanding the different types of business messages and following the 3-x-3 writing process will help you write more effective professional messages.
Match the message content area with the correct types of messages.
Sales pitches, requests for favors (persuasive positive negative)
Replies, goodwill messages, direct claims (persuasive positive negative)
Bad news, refusals (persuasive positive negative)
Consider the scenario about a positive message, and then answer the question.
Gilberto is composing an e-mail that explains the terms of a recent business transaction. He has determined the purpose of the message, analyzed his audience, and determined its reactions.
According to the 3-x-3 writing process, what actions make up his next steps?
a. Make a list of points to cover.
b. Plan for feedback.
c. Check for mechanical problems.
d. Collect information.
e. Compose the first draft.
While most business communication is now done electronically, there remain situations in which a business letter is most appropriate.
Messages delivered through business letters are less likely to reach (unintended recipients? or the media? or competitor?)
than messages delivered through (e-mail? or phone calls? face to face conversations?)
Thus, business letters are more (desired? exclusive? confidentia
Answer: Refer to Explanation
Explanation:
1. a. Sales pitches, requests for favors - Persuasive.
When writing a Sales Pitch or Request for Favors Message, one must try to convince the intended receiver to buy the good being sold or to be willing to grant the favor requested. For this reason, the tone has to be persuasive.
b. Replies, goodwill messages, direct claims - Positive
These types of messages have to have a positive tone because they should come across in a friendly way so that the receiver may accept it as such.
c. Bad news, refusals - Negative
These are negative messages and as such should have a negative and indirect tone so that the receiver may understand the gravity of the message.
2. a. Make a list of points to cover.
d. Collect information.
e. Compose the first draft
The 3-x-3 writing process is a method of writing used to encourage a good writing flow.
It is divided into 3 stages being, Prewriting, Writing and Revising.
During Prewriting, one must determine why the are writing as well as who the message is intended for. Gilberto has done this already so the next step is the Writing stage.
The Writing stage includes, Making a list of points to cover so that the writing may be orderly and have the relevant information. It also includes researching where you collect information for the message to be written. And then finally composing the first draft which can then be scrutinized in the next stage.
3. Messages delivered through business letters are less likely to reach unintended recipients than messages delivered through e-mail.
Thus, business letters are more confidential.
Messages through Business letters have the intended recipients stated and usually get to the intended recipient as a result. Emails can sometimes be mixed up.
That fact means that business letters can carry more sensitive information and as such are more confidential.
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.
Bob uses the cash method of accounting. During the tax year (calendar year), he had the following income and expenses: Interest on a savings account (credited to his account on January 2 of next year) $ 68 Dividend received from Virginia Credit Union $814 Interest received on a 5-year certificate of deposit (left in CD account to compound) $910 Penalty on the early withdrawal of the 5-year certificate of deposit $ 50 What is the amount of interest income Bob must report for the current tax year?
Answer:
$814
Explanation:
When individuals or small firms use cash accounting, they will record any expenses or revenue when they are actually paid for or collected respectively.
In this case, Bob must record:
Dividend received from Virginia Credit Union $814Interests received on January 2, of next year are not included (they are included in next year's tax return). Interest received on a 5-year certificate of deposit (left in CD account to compound) is not included because it was earned before this year and left in CD to compound. The penalty for early withdrawal is associated with the CD, so it is not included.
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.
The following information is available for the first year of operations of Creston Inc., a manufacturer of fabricating equipment:
Sales $1,344,600
Gross profit 363,000
Indirect labor 121,000
Indirect materials 49,800
Other factory overhead 22,900
Materials purchased 685,700
Total manufacturing costs for the period 1,484,400
Materials inventory, end of period 49,800
Using the above information, determine the following amounts:
a. Cost of goods sold $_________-
b. Direct materials cost $__________
c. Direct labor cost $__________
Answer:
a. Cost of goods sold $981,600
b. Direct materials cost $635,900
c. Direct labor cost $654,800
Explanation:
Direct Material Cost Calculation :
Opening Materials Inventory 0
Add Purchases of Materials 685,700
Less Closing Materials Inventory (49,800)
Direct Materials Cost 635,900
Direct Labor Cost ; Total Manufacturing Account
Direct Materials Cost 635,900
Indirect labor 121,000
Indirect materials 49,800
Other factory overhead 22,900
Manufacturing Costs before Direct Labor Cost 829,600
Direct Labor (Balancing Figure) 654,800
Total manufacturing costs 1,484,400
Cost of Goods Sold Calculation
Sales $1,344,600
Less Gross Profit ($363,000)
Cost of Goods Sold $981,600
The Polishing Department of Major Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 1,600 units that are 100% complete as to materials and 30% complete as to conversion costs; units started during the period are 42,900; ending inventory of 5,000 units 10% complete as to conversion costs. Manufacturing costs: Beginning inventory costs, comprised of $20,000 of materials and $43,180 of conversion costs; materials costs added in Polishing during the month, $175,800; labor and overhead applied in Polishing during the month, $125,680 and $257,140, respectively. Instructions:a. compute the equivalent units of production for materials and conversion costs for the month of septemberb. compute the unit costs for materials and conversion costs for the month.c. determine the costs to be assigne to the units transfered out in the process.
Answer:
a. compute the equivalent units of production for materials and conversion costs
materials = 44,500
conversion costs = 40,000
b. compute the unit costs for materials and conversion costs for the month
materials = $4.40
conversion = $10.65
c. determine the costs to be assign to the units transferred out in the process
Cost of units transferred out in the process = $594,475
Explanation:
a. compute the equivalent units of production for materials and conversion costs
materials
Units Completed and Transferred to Finished Goods (100%×39,500) =39,500
Units in Closing Work In Process (100%×5,000) = 5,000
Total = 44,500
conversion costs
Units Completed and Transferred to Finished Goods (100%×39,500) =39,500
Units in Closing Work In Process (10%×5,000) =
500
Total = 40,000
Calculation of Units Completed and Transferred to Finished Goods
1,600+42,900-5,000 = 39,000
b. compute the unit costs for materials and conversion costs for the month
materials
Opening Work In Process Costs = $20,000
Add Costs Incurred during the Period = $175,800
Total = $195,800
Unit costs for materials = Total Costs / Equivalent units of production for materials
= $195,800 / 44,500
= $4.40
conversion
Opening Work In Process Costs = $43,180
Add Costs Incurred during the Period($125,680 + $257,140) = $382,820
Total = $426,000
Unit costs for conversion = Total Costs / Equivalent units of production for conversion
= $426,000 / 40,000
= $10.65
c. determine the costs to be assign to the units transferred out in the process
Total Unit Cost Calculation
Materials = $4.40
Conversion = $10.65
Total = $15.05
Cost of units transferred out in the process = 39,500 × $15.05
= $594,475
Samson Company is an engineering firm. Many of the employees are engineers who are working individually on different projects. Most of the design work takes place on computers. The computers are connected by a network and employees can also "surf" the internet through their desk top computers. The president is concerned about productivity among his engineers. He has acquired software that allows him to monitor each engineer's computer work. Anytime during the day, the president can observe on her screen exactly what the different engineers are working on. The engineers are quite unhappy with this monitoring process. They feel it is unethical for the president to be able to access what they are working on without their knowledge. Describe the pros and cons of monitoring through observing the computer work of the engineers.
Answer:
Both pros and cons are explanied below.
Explanation:
Pros: First of all, the president of the firm can know exactly what the employees are looking at. Secondly, due to that previous reason, the president can know and be aware of, if there is one or more than one person that may surf in the internet for thing that are not appropiate (illegal weapons,etc) and therefore to contact police about. Moreover, the president will also have information about what every employee look at and therefore to comprehend or at least try to understand the employee better, but in an unethical way.
Cons: Well, in this case, the president is doing a very harmful and unethical technique in order to obtain what only he cares about and therefore that he is thinking very individually and that can harm the organization in a huge way. Moreover, the president will broke the privacy of the employees by doing it and that action will impact negatively in the workers and that will influece as well in their work in the company and consequently in the productivity of the firm.
4. The prices of discount bonds (all with maturity value of $1,000) maturing in years 1, 2, 3, 4, 5 are given below. Price Time to Maturity 920 1 860 2 790 3 700 4 600 5 What is the yield to maturity on a risk-free 5% bond due in 5 years (also with maturity value of $1,000)
Answer:
YTM = 10.5%
Explanation:
Solution
Given that:
The cash flow related with the 5% bond are computed below:
t = 0 1 (50) 2 (50) 3(50) 4 (50) 5(1050)
Now,
We calculate the discount factors which is given below:
1 /1 + r₁ = 920/1000 = 0.92
1/(1 + r₂)² = 860/1000 = 0.86
1/(1 + r₃)³ = 790/1000 = 0.79
1/(1 + r₄)⁴ = 700/1000 = 0.7
1/(1 + r₅)⁵ = 600/1000 0.6
Thus,
P₅% bond = 50 (0.92) + 50 (0.86) + 50 (0.79) + 50 (0.7) +1050 (0.6)
=$793. 50
For the yield to maturity (YTM) is refereed to as the IRR of this bond.
Now to solve for the YTM we have teh following.
P₅% bond = 50/YTM ║ 1- 1/(1 +YTM)⁵║ + 1000/(1+ YTM)⁵
793.5 = 50/YTM ║ 1- 1/(1 +YTM)⁵║ + 1000/(1+ YTM)⁵
Therefore
YTM = 10.5%
Note: the present value of all coupons was computed by applying the annuity formula, also added the PV of the face value
Most employees who use flextime prefer to work independently of others. In order to accommodate this preference, businesses permit them to clock in and out as they wish, as long as they put in the necessary 40-hour work week. On some days, they may arrive at 6:00 a.m., while on other days they may decide to come in at noon.
a. True
b. False
Borasco Corp. owns land with a fair market value of $200,000. Borasco purchased the land 10 years ago for $65,000 and owes a liability of $50,000 as of August 2 of the current year. Alvo Corp. owns 100% of Borasco. Borasco is completely liquidated on August 2 of the current year, according to a plan adopted on June 18 of the current year. As a result, the land is transferred to Alvo in complete cancellation of Borasco's stock. What basis does Alvo have in the land it receives?
Answer:
$65,000
Explanation:
Borasco was the person who purchased the land for $65,000 in which the land was later transferred to Alvo. Therefore no gain or loss is been recognized in this liquidation because it subsidiary is been liquidated by the parent which is why the basis of land is said to be carryover basis of $65,000 at the end of the transaction.
Laser Delivery Services, Inc. (LDS), was incorporated January 1. The following transactions occurred during the year:________. A. Received $37,000 cash from the company's founders in exchange for common stock. B. Purchased land for $14,000, signing a two-year note (ignore interest). C. Bought two used delivery trucks at the start of the year at a cost of $9,000 each; paid $3,500 cash and signed a note due in three years for $14,500 (ignore interest). D. Paid $1,800 cash to a truck repair shop for a new motor, which increased the cost of one of the trucks. E. Stockholder Jonah Lee paid $320,000 cash for a house for his personal use.
Question Requirements:
1. Record the transaction. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal
2. Show the effects of the journal entries by account, using the T-account Cash Equipment Beg. Bal Beg. Bal End. Bal End. Bal Land Notes Payable Beg. Bal Beg. Bal. End. Bal. End. Bal. Common Stock Beg. Bal End. Bal
3. Extract a Trial Balance.
4. Prepare a classified balance sheet for Laser Delivery Services, Inc., at the end of December. Enter Retained earnings with a zero balance in the appropriate section. LASER DELIVERY SERVICES, INC Balance Sheet.
Answer:
1. Journal Entries
Debit Credit
A. Cash $37,000
Common Stock $37,000
To record issue of common stock.
B. Land $14,000
Note Payable $14,000
To record purchase of land for note payable.
C. Vehicles $18,000
Cash $3,500
Notes Payable $14,500
To record purchase of delivery trucks by cash and notes payable.
D. Vehicles Repairs $1,800
Cash $1,800
To record vehicle repair.
E. No journal entry required
2. Leger Accounts:
a) Cash Account
Debit Credit Balance
A. Common Stock $37,000 $37,000
C. Vehicles $3,500 $33,500
D. Vehicle Repair 1,800 $31,700
b) Common Stock
Debit Credit Balance
A. Cash $37,000 $37,000
c) Land
Debit Credit Balance
B. Notes Payable $14,000 $14,000
d) Notes Payable
Debit Credit Balance
B. Land $14,000 $14,000
C. Vehicles $14,500 $28,500
e) Vehicles
Debit Credit Balance
C. Cash $3,500 $3,500
C. Notes Payable $14,500 $18,000
D. Cash $1,800 $19,800
3. Trial Balance as at December 31:
Debit Credit
Cash $31,700
Common Stock $37,000
Land $14,000
Notes Payable $28,500
Vehicles $19,800
Total $65,500 $65,500
4. Balance Sheet as at December 31:
Assets:
Current Assets:
Cash 31,700 31,700
Long-Term Assets:
Land 14,000
Vehicles 19,800 33,800
Total Assets $65,500
Liabilities + Equity:
Liabilities:
Notes Payable 28,500
Common Stock 37,000
Total Liabilities + Equity $65,500
Explanation:
a) The General journal records the transactions as they occur on a daily basis, showing the accounts to be debited and the ones to be credited.
b) The house bought by Stockholder Jonah Lee is a personal transaction that does not relate to the company. The entity concept that separates ownership from the business does not allow such personal transactions to be recorded in the accounting records of a company.
c) The balance sheet shows the assets and the owners of the financial resources used to acquire the assets. It is always in balance, with assets equalling the liabilities and equity with the occurrence of each transaction.
Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 2 for $22,000. In addition to the cost of inventory, the company also pays $420 for freight charges associated with the purchase on the same day.Record the purchase of inventory on February 2, including the freight charges. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record the purchase of inventory on account.
2. Record the payment of freight charges in cash.
Answer:
1.
February 2
Dr Purchased Inventory $22,000
Cr Accounts Payable $22,000
2.
February 2
Dr Inventory 420
Cr Cash 420
Explanation:
Shankar Company Journal entry
1.
February 2
Dr Purchased Inventory $22,000
Cr Accounts Payable $22,000
(To rcord the purchase of inventory on account)
2.
February 02
Dr Inventory 420
Cr Cash 420
(To record the payment of freight charges in cash)
Suppose that because of the popularity of the low-carb diet, bakeries need fewer workers and steak houses need more workers. The unemployment created by this change is:
A. frictional unemployment created by sectoral shifts.
B. structural unemployment created by sectoral shifts.
C. structural unemployment created by efficiency wages.
D. frictional unemployment created by efficiency wages.
Answer:
The correct answer is: A. frictional unemployment created by sectoral shifts.
Explanation:
Frictional unemployment is a type of search unemployment, which occurs when the worker is looking for a job, or being transferred from one job to another.
This type of unemployment is caused by several circumstances, in the scenario exemplified by the question above, frictional unemployment occurs due to sectoral changes, due to the popularity of the low-carb diet, so there was a migration of jobs from bakeries that need less workers to the steakhouses who need more workers.
Wolfpack Construction has the following account balances at the end of the year.
Accounts Balances Equipment $25,000
Accounts payable 2,800
Salaries expense 32,000
Common stock 12,000
Land 17,000
Notes payable 19,000
Service revenue 38,000
Cash 5,800
Retained earnings _______
Required:
Prepare a balance sheet for Wolfpack Construction.
Answer:
Find the balance sheet below:
beginning retained earnings=$47,800-$39,800=$8,000
Explanation:
Net income for the year =service revenue-salaries expense=$38,000-$32,000=$6,000
retained earnings=net income=$6,000
Wolfpack Construction Balance Sheet as at year end
Non-current assets
equipment $25,000
land $17,000
Total non-current assets $42,000
Current assets:
cash $5,800
total current assets $5,800
Total assets $47,800
Common stock $12,000
retained earnings $6,000
total stockholders' equity $18,000
current liabilities:
accounts payable $2,800
notes payable $19,000
Total liabilities $21,800
Total liabilities and equity $39,800
The difference between the total assets and total equity plus liabilities may be due to beginning retained earnings figure which was not provided
Ticker Services began operations in 2015 and maintains long-term investments in available-for-sale securities. The year-end cost and fair values for its portfolio of these investments follow.
Portfolio of Available-for-Sale Securities Cost Fair Value
December 31, 2015 $372,000 $360,860
December 31, 2016 428,500 455,800
December 31, 2017 600,200 700,500
December 31, 2018 876,900 780,200
Prepare journal entries to record each year-end fair value adjustment for these securities.
Answer:
1.
Dec. 31, year 1
Dr Fair value adjustment – AFS (LT) 11,140
Cr Unrealized gain – Equity 11,140
2.
Dec. 31, year 2
Dr Fair value adjustment – AFS (LT) 16,160
Cr Unrealized gain – Equity 16,160
3
Dec. 31, year 3
Dr Fair value adjustment – AFS (LT) 73,000
Cr Unrealized gain – Equity 73,000
4.
Dec. 31, year 4
Dr Unrealized loss – Equity 3,600
Cr Fair value adjustment – AFS (LT) 3,600
Explanation:
General journal for Ticker Services
1.
Dec. 31, year 1
Dr Fair value adjustment – AFS (LT) 11,140
Cr Unrealized gain – Equity 11,140
($372,000 $360,860)
2.
Dec. 31, year 2
Dr Fair value adjustment – AFS (LT) 16,160
Cr Unrealized gain – Equity 16,160
(455,800-428,500) -11,140
3.
Dec. 31, year 3
Dr Fair value adjustment – AFS (LT) 73,000
Cr Unrealized gain – Equity 73,000
(700,500-600,200)-(455,800-428,500)
100,300-27,300=73,000
4.
Dec. 31, year 4
Dr Unrealized loss – Equity 3,600
Cr Fair value adjustment – AFS (LT) 3,600
(700,500-600,200) -(876,900 -780,200)
100,300-96,700
3,600
Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of housing. Assuming that demand remains unchanged, by how many additional units of housing would the government need to supply to get the market equilibrium rental price to fall to $1,500 per month?
Answer: 2500 units
Explanation: Since government plans on reducing the market equilibrium rent to $1500 per month, it's required of the govt. to extend the provision of apartments by 2500 units.
The equilibrium rent is $2000 and also the equilibrium quantity is 12,500 units. If 2500 more units were added by the govt. this might cause a rise of 15,000 unit available for rent within the market.
The equilibrium price would now be $1500 (the rent the govt. is trying to achiev.) and also the equilibrium quantity 15,000 units
Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to determine Bounty's variable utilities cost per machine hour. Round your answer to the nearest cent.
Cost Machine Hours
March $3,018 15,239
April 2,628 9,504
May 2,857 11,534
June 3,730 18,045
a. $0.86
b. $1.42
c. $0.13
d. $0.90
Answer:
Variable cost per hour= $0.13
Explanation:
Giving the following information:
March $3,018 15,239
April 2,628 9,504
May 2,857 11,534
June 3,730 18,045
To calculate the unitary variable cost under the high-low method, we need to use the following formula:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (3,730 - 2,628) / (18,045 - 9,504)
Variable cost per unit= $0.13 per hour
Ned's Natural Foods sells unshelled peanuts by the pound Historically, Ned has observed that daily demand is normally distributed with a mean of 80 pounds and a standard deviation of 10 pounds Lead time also appears normally distributed with a mean of eight days and a standard deviation of one day. Use Table What ROP would provide a stock out risk of 10 percent during lead time? (Round your answer to the nearest whole number.) rope units What is the expected number of units (pounds) short per cycle? (Round your answer to 3 decimal places.) Expected number of units
Answer:
a) 749
b) 4.073
Explanation:
Given:
Mean = demand = 80 pounds
Standard deviation of demand = 10 pounds
Lead time = 8 days
Standard deviation of lead time = 1 day
a) What ROP would provide a stock out risk of 10 percent during lead time.
To find this re-order point (ROP) quantity, take the formula:
[tex] ROP = d(LT) + z \sqrt{ LT \sigma_d ^2 + LT^2 \sigma_L_T ^2} [/tex]
Here, service level = 100%-10% = 90%,
Thus z at 90% = ±1.28
[tex] ROP = 80(8) + 1.28 \sqrt{8* 10^2 + (8)^2*(1)^2} [/tex]
[tex] ROP = 640 + 1.28\sqrt{800 + 64} [/tex]
= 640 + 1.28* 84.85
= 748.61
≈ 749 units
b) What is the expected number of units (pounds) short per cycle.
Find the number of units shorts per cycle. Take the formula:
[tex] E(n) = E(z) * \sigma d_L_T [/tex]
[
Where E(z) = standardized number of shorts = 0.048
[tex] \sigma d_L_T [/tex] = standard deviation of lead time demand = 84.85
Therefore,
E(n) = 0.048 * 84.85
= 4.073
Joe Tau, CEO of Tau Pharma places a major emphasis on his creative passion and spirit of innovation. Tau wants to create a culture where entrepreneurial drive is contagious and motivates employees to take up a new idea, use it, and do it as quickly as possible. To stimulate creativity and motivate passionate engagements, Tau established the structural framework and motivators that include opportunities for:
A. achievement
B. recognition
C. Creward
D. All of the above
Answer:
D. All of the above.
Explanation:
Since, Joe Tau, CEO of Tau Pharma places a major emphasis on his creative passion and spirit of innovation. He is interested in creating a culture where entrepreneurial drive is contagious and motivates employees to take up a new idea, use it, and do it as quickly as possible.
Hence, in order to stimulate creativity and motivate passionate engagements, Tau should establish a structural framework and motivators that include opportunities for achievement, recognition and reward.
This simply means, when Tau develops a structural framework comprising of setting up potential goals or milestone (achievement) for employees, ensure their achievements are recognized and as well as rewarding them for their achievements; the employees would certainly become motivated to pick up new ideas and use the ideas as quickly as possible. Thus, creating a positively contagious culture among them.
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
