Answer:
Banes Domino's Company
Closing Entries
Date Acct.No Account Debit Credit
9 Income Summary 329,000.00
11 Salary Expense 244,500.00
12 Rent Expense 48,000.00
13 Depreciation Expense 25,000.00
14 Supplies Expense 9,500.00
15 Miscellaneous Expense 2,000.00
Expenses are closed to Income Summary Account.
10 Fees Earned 510,000.00
9 Income Summary 510,000.00
Revenue Accounts are closed to Income Summary Account.
9 Income Summary 181,000.00
Jack Banes, Capital 181,000.00
To close Income Summary Account
Jack Banes, Capital 47,000.00
Jack Banes, Drawing 47,000.00
To Close withdrawals account.
6. Trade deficit and the currency depreciation Which approach to the relationship between exchange rates and the trade balance predicts that a currency depreciation will improve a nation’s trade balance if that nation’s output exceeds the sum of consumption, investment, and government expenditures? The elasticity approach The absorption approach The monetary approac
Answer:
The absorption approach
Explanation:
The absorption approach with respect to the balance of payments derives that a balance of trade of a country will only better if the output of the company in terms of goods and services rises by more than its absorption or utilization
Here, the absorption refers to incurred expenditure by the residents who are domestic on the goods and services.
Hence, according to the given situation, the appropriate option is absorption approach
Lance Murdock purchased a wooden statue of a Conquistador for $ 7 comma 200 to put in his home office 7 years ago. Lance has recently married, and his home office is being converted into a sewing room. His new wife, who has far better taste than Lance, thinks the Conquistador is hideous and must go immediately. Lance decided to sell it on e-Bay and only received $4 comma 700 for it, and so he took a loss on the investment. What was his rate of return, that is, the value of i?
Answer:
-5.91%
Explanation:
The rate of return can be determined using the future value formula as shown below:
FV=PV*(1+r)^n
FV is the amount the wooden statue was sold for after it was purchased seven years which is $4700
PV is the original cost of the wooden statue
r is the unknown
n is the number of years which 7 years
4,700=7,200*(1+r)^7
divide both sides by 7,200
4700/7200=(1+r)^7
0.652777778 =(1+r)^7
divide the index on both sides by 7
(0.652777778) ^(1/7)=1+r
0.940887955 =1+r
r=0.940887955 -1
r=-0.059112045 =-5.91%
1. Modernative Comp. has a debt–equity ratio of 0.65, its return on assets is 8.2 percent, and total equity is $515,000. What is Modernative’s equity multiplier? Return on equity? Net income?
Answer:
Explanation:
Equity multiplier is one of the financial leverage ratios, which measures the amount of a company's asset that are financed by the shareholder by comparing total assets with total shareholder's equity
[tex]\text {Equity multiplier}=\frac{\text {Total Assets}}{\text {Total Equity}}[/tex]
[tex]\text {Return on owner's equity}=\frac{\text {Net income}}{\text {Total equity}}[/tex]
Determine the amount of equity multiplier
Equity multiplier = 1 + Debt to equity ratio
= 1 + 0.65
= 1.65
Hence, the amount of equity multiplier is 1.65
Determine the amount of return on equity
Return on equity = Return on assets * Equity multiplier
= 0.082 * 1.65
= 13.53%
Hence, the Return on equity is 13.53%
Determine the amount of Net income
Net income = Return on equity * Total equity
= 13.53% * $515,000
= $69,679.50
Hence, the amount of net income is $69,679.50
The following information pertains to the Packer Corporation. Calculate the cost of goods sold for the period:
Beginning Raw Materials $30,000
Ending Raw Materials $70,000
Beginning Work in Process Inventory $40,000
Ending Work in Process Inventory $46,000
Beginning Finished Goods Inventory $72,000
Ending Finished Goods Inventory $68,000
Cost of Goods Manufactured for the period $246,000
a. $250,000.
b. $290,000.
c. $242,000.
d. $246,000.
e. $258,000.
Answer:
COGS= $250,000
Explanation:
Giving the following information:
Beginning Finished Goods Inventory $72,000
Ending Finished Goods Inventory $68,000
Cost of Goods Manufactured for the period $246,000
To calculate the cost of goods sold, we need to use the following formula:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 72,000 + 246,000 - 68,000
COGS= $250,000
Crawford Corporation incurred the following transactions.1. Purchased raw materials on account $53,000.2. Raw Materials of $41,800 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $8,700 was classified as indirect materials.3. Factory labor costs incurred were $60,500, of which $50,600 pertained to factory wages payable and $9,900 pertained to employer payroll taxes payable.4. Time tickets indicated that $54,800 was direct labor and $5,700 was indirect labor.5. Manufacturing overhead costs incurred on account were $84,800.6. Depreciation on the company’s office building was $9,000.7. Manufacturing overhead was applied at the rate of 160% of direct labor cost.8. Goods costing $94,200 were completed and transferred to finished goods.9. Finished goods costing $78,200 to manufacture were sold on account for $109,000.Journalize the transactions.
Answer:
1.
Raw Materials $53,000 (debit)
Account Payable $53,000 (credit)
2.
Work In Process : Direct Materials $33,100 (debit)
Work In Process : Indirect Materials $ 8,700 (debit)
Raw Materials $41,800 (credit)
3.
Salaries Expenses $60,500 (debit)
Salaries and Wages Payable $60,500 (credit)
4.
Work In Process : Direct Labor $54,800 (debit)
Work In Process : Indirect Labor $5,700 (debit)
Salaries Expense $60,500 (credit)
5.
Overheads Expenses $84,800 (debit)
Trade Payable $84,800 (credit)
6.
Depreciation - Office Building $9,000 (debit)
Accumulated Depreciation- Office Building $9,000 (credit)
7.
Work In Process $87,680 (debit)
Overheads $87,680 (credit)
8.
Finished Goods $94,200 (debit)
Work In Process $94,200 (credit)
9.
J1
Cost of Goods Sold $78,200 (debit)
Finished Goods $78,200 (credit)
J2
Trade Receivable $109,000 (debit)
Revenue $109,000 (credit)
Explanation:
The Manufacturing Costs accumulate in the Work In Process Account during manufacture.
The Costs is de-recognized from Work In Process Account to Finished Goods Account on transfer to Finished Goods.
The Costs are then de-recognized from Finished Goods to Cost of Sales on Sale to Customers.
Calculation of Overhead Applied :
Overhead = $54,800 × 160% = $87,680.
A manager must decide how many machines of a certain type to purchase. Each machine can process 100 customers per day. One machine will result in a fixed cost of $2,100 per day, while two machines will result in a fixed cost of $3,900 per day. Variable costs will be $17 per customer, and revenue will be $45 per customer.
a. Determine the break-even point for each range. (Round your answers to the next whole number.) One machine Two machines
b. If estimated demand is 90 to 120 customers per day, how many machines should be purchased?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Each machine can process 100 customers per day. One machine will result in a fixed cost of $2,100 per day, while two machines will result in a fixed cost of $3,900 per day. Variable costs will be $17 per customer, and revenue will be $45 per customer.
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
1 machine:
Break-even point in units= 2,100/ (45 - 17)
Break-even point in units= 75 costumers
2 machines:
Break-even point in units= 3,900/ 28
Break-even point in units= 139 costumers
If the demand is from 90 to 120 costumers per day, the company should buy 1 machine. With this level of demand, the company will not cover the costs of two machines.
Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow. (Round OH rate and cost per unit answers to 2 decimal places.)
Process Activity Overhead Cost Driver Quantity
Compnents Changeover $452,000 Number of batches 750
Machining 300,200 Machine hours 7,640
Setups 229,000 Number of setups 40
$981,200
Finishing Welding $180,100 Welding hours 3,600
Inspecting 231,000 Number of inspextions 850
Rework 81,250 Rework orders 210
$472,350
Support Purchasing $136,500 PUrchase orders 480
Providing space 30,300 Number of units 4,500
Providing utilities 50,910 Number of units 4,500
$227,710
Additional production information concerning its two product lines follows.
Model 145 Model 212
Units produced 1,500 3,000
Welding hours 1,400 2,200
Batches 375 375
Number of inspections 610 340
Machine hours 2,290 6,350
Setups 20 20
Rework orders 80 130
Purchase orders 320 160
Required:
1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line.
2. Determine the total cost per unit for each products line if the direct labor and direct materials costs per unit are $220 for Model 145 and $150 for Model 212.
3. Assume if the market price for Model 145 is $755 and the market price for Model 212 is $590, determine the profit or loss per unit for each model.
Answer:
1. Plantwide Overhead Rate $ 220.06 per machine hour
Total Cost per Unit= Model 145 $ 555.96 per unit
Total cost per unit = Model 212 $ 616.94 per unit
Profit (loss) Model 145 219.04
Loss Model 212 (26.94)
Explanation:
Real Cool
Process Activity Overhead Cost Driver Quantity
Components
Changeover $452,000 Number of batches 750
Machining 300,200 Machine hours 7,640
Setups 229,000 Number of setups 40
$981,200
Finishing
Welding $180,100 Welding hours 3,600
Inspecting 231,000 Number of inspections 850
Rework 81,250 Rework orders 210
$472,350
Support
Purchasing $136,500 Purchase orders 480
Providing space 30,300 Number of units 4,500
Providing utilities 50,910 Number of units 4,500
$227,710
Additional production information concerning its two product lines follows.
Model 145 Model 212
Units produced 1,500 3,000
Welding hours 1,400 2,200
Batches 375 375
Number of inspections 610 340
Machine hours 2,290 6,350
Setups 20 20
Rework orders 80 130
Purchase orders 320 160
We find the plantwide overhead rate by dividing the total overhead with the total machine hours.
1. Plantwide Overhead Rate= Total Factory Overhead/ Total Machine Hours
Plantwide Overhead Rate= $981,200+ $472,350+$227,710/7640
= 1681260/7640= $ 220.06 per machine hour
We multiply the machine hours of each model to get the overhead .
2. Cost of Model 145
Materials and Labor = $220 *1500= $330,000
Overhead = $220.06 *2290= $503,937.4
Total Cost = $83,3937.4
Total Cost per Unit= $83,3937.4/1500= $ 555.96 per unit
Cost Of Model 212
Materials and Labor = $150 *3000= $ 450,000
Overhead = $220.06 *6350= $ 1400,810
Total Cost = $ 1850810
Total cost per unit = $ 1850810/ 3000= $ 616.94 per unit
We find the profit or loss by subtracting the mfg cost from the market value.
3. Model 145 Model 212
Market Price $775 $590
Manufacturing Cost ($555.96) ($616.94)
Profit (loss) 219.04 (26.94)
X-treme Vitamin Company is considering two investments, both of which cost $22,000. The cash flows are as follows:
Year Project A Project B
1 $25,000 $22,000
2 12,000 11,000
3 8,000 14,000
Calculate the payback period for Project A and Project B.
Answer:
0.88 years
1 year
Explanation:
Payback period calculates the amount of the time it takes to recover the amount invested in a project from its cumulative cash flows.
For project A:
Amount invested = $-22,000
Amount recovered in year 1 = $-22,000 + $25,000 =$-3000
The amount invested is recovered In 22,000 / $25,000 = 0.88 years
For project B:
Amount invested = $-22,000
Amount recovered in year 1 = $-22,000 + $22,000 = 0
The amount invested is recovered in a year
I hope my answer helps you
Suppose Cook Plus manufactures cast iron skillets. One model is a 10-inch skillet that sells for $ 24. Cook Plus projects sales of 675 10-inch skillets per month. The production costs are $ 5 per skillet for direct materials, $ 3 per skillet for direct labor, and $ 6 per skillet for manufacturing overhead. Cook Plus has 60 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20% of the next month's sales. Selling and administrative expenses for this product line are $ 1 comma 600 per month. How many 10-inch skillets should Cook Plus produce in July?
Answer:
Production= 750 units
Explanation:
Giving the following information:
Cook Plus projects sales of 675 10-inch skillets per month.
Cook Plus has 60 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20% of the next month's sales.
TO calculate the production required, we need to use the following formula.
Production= sales + desired ending inventory - beginning inventory
Production= 675 + (0.2*675) - 60
Production= 750 units
A market for the trading of assets is established by individuals buying and selling shares from inventory. These individuals stay in business by earning a commission equal to the difference between the price the buyer of the shares pays and the price the seller of the shares receives. What do we call this type of market
Answer:
Dealer market
Explanation:
The reason is that the person who mediates between the seller and the buyer is the called dealer and this person never owns the asset, what he does is that he mediates between two parties to increase the chance of purchase at a reasonable price and by doing so he earns commission. Such a market is known as dealer market.
On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances:Accounts Debit Credit Cash $ 25,700 Accounts Receivable 46,000 Allowance for Uncollectible Accounts 4,100 Inventory 49,000 Land 90,100 Accounts Payable 25,700 Notes Payable (6%, due in 3 years) 49,000 Common Stock 75,000 Retained Earnings 57,000 Totals $ 210,800 $ 210,800 The $49,000 beginning balance of inventory consists of 490 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions:January 3 Purchase 1,750 units for $196,000 on account ($112 each).January 8 Purchase 1,850 units for $216,450 on account ($117 each).January 12 Purchase 1,950 units for $237,900 on account ($122 each).January 15 Return 195 of the units purchased on January 12 because of defects.January 19 Sell 5,700 units on account for $855,000. The cost of the units sold is determined using a FIFO perpetual inventory system.January 22 Receive $837,000 from customers on accounts receivable.January 24 Pay $620,000 to inventory suppliers on accounts payable.January 27 Write off accounts receivable as uncollectible, $2,800.January 31 Pay cash for salaries during January, $138,000.The following information is available on January 31, 2021.At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each.The company estimates future uncollectible accounts. The company determines $5,900 of accounts receivable on January 31 are past due, and 35% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31.Accrued income taxes at the end of January are $14,200.Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 - 10) assuming a FIFO perpetual inventory system. Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the account balances.2. Record adjusting entries on January 31. in the 'General Journal' tab (these are shown as items 11-14).3. Review the adjusted 'Trial Balance' as of January 31, 2021, in the 'Trial Balance' tab.4. Prepare a multiple-step income statement for the period ended January 31, 2021, in the 'Income Statement' tab.5. Prepare a classified balance sheet as of January 31, 2021, in the 'Balance Sheet' tab.6. Record the closing entries in the 'General Journal' tab (these are shown as items 15 and 16).7. Using the information from the requirements above, complete the 'Analysis' tab.
Answer:
Big Blast Fireworks
a) General Journal to record transactions:
Jan. 3
Debit Inventory $196,000
Credit Accounts Payable $196,000
To record the purchase of 1,750 units at $112 each
Jan. 8
Debit Inventory $216,450
Credit Accounts Payable $216,450
To record the purchase of 1,850 units at $117 each
Jan. 12
Debit Inventory $237,900
Credit Accounts Payable $237,900
To record the purchase of 1,950 units at $122 each
Jan. 15
Debit Accounts Payable $23,790
Credit Inventory $23,790
To record the return of 195 units at $122 each.
Jan. 19
Debit Accounts Receivable $855,000
Credit Sales Revenue $855,000
To record the sale of 5,700 units on account.
Debit Cost of Goods Sold $657,870
Credit Inventory $657,870
To record the cost of sales of 5700 units.
Jan. 22
Debit Cash Account $837,000
Credit Accounts Receivable $837,000
To record cash receipt from customers.
Jan. 24
Debit Accounts Payable $620,000
Credit Cash Account $620,000
Jan. 27
Debit Allowance for Uncollectible Accounts $2,800
Credit Accounts Receivable $2,800
To record the write-off of uncollectible.
Jan. 31
Debit Salaries & Wages Expense $138,000
Credit Cash Account $138,000
To record the payment of cash for salaries
2. Adjusting Entries on January 31, 2021:
Debit Loss on Inventory $3,190
Credit Inventory $3,190
To record the loss in value.
Debit Allowance for Uncollectible Accounts $2,065
Credit Accounts Receivable $2,065
To record the write-off of uncollectible.
Debit Uncollectible Expense $3,722
Credit Allowance for Uncollectible Accounts $3,722
To bring the allowance for uncollectible accounts to $2,957.
Debit Interest on Notes Payable $245
Credit Interest Payable $245
To record accrued interest for the month
3. Adjusted Trial Balance at January 31, 2021:
Debit Credit
Cash $104,700
Accounts Receivable 59,135
Allowance for Uncollectible Accounts 2,957
Beginning Inventory 49,000
Ending Inventory 14,500
Land 90,100
Salaries 138,000
Loss on Inventory 3,190
Uncollectible Expense 3,722
Interest on Notes Payable 245
Cost of Goods Sold 657,870
Sales Revenue 855,000
Accounts Payable 32,260
Notes Payable (6%, due in 3 years) 49,000
Interest on Notes Payable 245
Common Stock 75,000
Retained Earnings 57,000
Totals $1,071,462 $1,071,462
Balance Sheet at January 31, 2021:
Assets:
Cash $104,700
Accounts Receivable 59,135
Less uncollectible allw. -2,957
Inventory 14,500
Land 90,100
Total $265,478
Liabilities:
Accounts Payable 32,260
Notes Payable (6%, due in 3 years) 49,000
Interest on Notes Payable 245 $81,505
Common Stock 75,000
Retained Earnings 108,973 $183,973
Total $265,478
Explanation:
a) Unadjusted Trial Balance at January 1, 2021:
Debit Credit
Cash $ 25,700
Accounts Receivable 46,000
Allowance for Uncollectible Accounts 4,100
Inventory 49,000
Land 90,100
Accounts Payable 25,700
Notes Payable (6%, due in 3 years) 49,000
Common Stock 75,000
Retained Earnings 57,000
Totals $ 210,800 $ 210,800
b) Accounts Receivable
Beginning balance $46,000
Credit Sales $855,000
less write-off -2800
less write-off -2,065
less cash receipts -$837,000
Ending balance $59,135
c) Estimated uncollectible allowance = $2,957 (5% of accounts receivable balance, i.e $59,135)
d) Uncollectible Expense:
Ending balance $2957
Plus write-off 2,800
plus write-off 2,065
Beginning balance -4,100
Uncollectible expense 3,722
e) Cash Account balance:
Beginning balance $25,700
Cash from customers $837,000
Payment to suppliers-$620,000
Salaries -$138,000
Ending balance $104,700
f) Accounts Payable
Beginning balance $25,700
Inventory:
1,750 units for $196,000
1,850 units for $216,450
1,950 units for $237,900
195 units return -$23,790
less payment -$620,000
Ending Balance $32,260
g) Income Statement:
Sales $855,000
less cost of sales -657,870
Gross Income $197,130
Salaries -138,000
Loss on Inventory -3,190
Uncollectible Exp -3,722
Interest on Note -245
Net Income $51,973
Retained Earning 57,000
Ending R/Earnings$108,973
Cost of Goods Sold, using FIFO:
490 units at $100 each $49,000
1,750 units at $112 each $196,000
1,850 units at $117 each $216,450
1,610 units at $122 each $196,420
7,500 units sold $657,870
Consider the following scenario:Suppose that Sharon has just finished smoking a cigarette and is thinking about throwing the cigarette butt onto her neighbor Paolo's driveway. Although no police officers are around, she instead decides to carry it to a trash can because she doesn't want to embarrass herself by letting people see her littering.Which of the following types of private solutions to the externality of littering has occurred in this case?(A) Integration of different types of businesses through merger or acquisition(B) Contracts(C) Charities(D) Moral codes and social sanctions
Answer:
Moral codes and social sanctions
Explanation:
Externality is when the actions of a producer or consumer have an effect on third parties not involved in production or consumption.
Externality can be positive or negative.
Postive externality is when the benefits of economic activities to third parties exceeds the costs.
Negative externality is when the costs of economic activities to third parties exceeds the benefits.
Smoking and littering the environment with cigeratte butts is an example of an activity that generates negative externality.
Sharon's morals and sense of judgement cautioned her against littering with her cigarette butts because she knows such activity is frowned against by the society. So, in this case she is guided by her moral codes.
This is one of the solutions to externality.
Other solutions include:
Taxation
Integration of different types of businesses through merger or acquisition
Contracts
Charities
I hope my answer helps you
Graber Company had $130,000 in sales on account last year. The beginning accounts receivable balance was $18,000 and the ending accounts receivable balance was $12,000. The company's average collection period was closest to: Select one: a. 33.69 days b. 42.12 days c. 84.23 days d. 50.54 days
Answer:
b. 42.12 days
Explanation:
Calculation for Graber company's average collection period will be:
Using this formula
Average collection period =Sales/[(Beginning accounts receivable +Ending accounts receivable)/2]
Let plug in the formula
130,000/[(18,000 + 12,000)/2]
=130,000/(30,000/2)
130,000/15,000
= 8.66days
Hence,
365/8.666666
=42.12 days
Therefore Graber company's average collection period will be 42.12 days
Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $36,000 and $24,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $45,000.a. What is the amount of a gain or loss on realization?$b. How should the gain or loss be divided between Hewitt and Patel?Hewitt Patel c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0".
Answer:
A. ($15000) Loss
B. Hewitt= $7500, Patel= $7500
C. Hewitt= $28500, Patel= $16500
Explanation:
Workings:
A. Gain/loss = Cash balance-(Hewitt Capital+ Patel Capital)
Gain/loss = $45000-($36000+$24000)
Loss = ($15000)
B.
Hewitt = ($15000*50%) = $7500
Patel = ($15000*50%) = $7500
C. Hewitt Patel
Remaining cash $36000-$7500 $24000-$7500
$28500 $16500
Blue Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $12,200,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Blue’s equipment. Blue’s controller estimates that expected future net cash flows on the equipment will be $7,686,000 and that the fair value of the equipment is $6,832,000. Blue intends to continue using the equipment, but it is estimated that the remaining useful life is 4 years. Blue uses straight-line depreciation.
(a) Prepare the journal entry (if any) to record the impairment at December 31, 2020.
(b) Prepare the journal entry for the equipment at December 31, 2021.
Answer:
Journal Entry - Impairment
Debit : Impairment Loss, $854,000
Credit: Accumulated Impairment Loss, $854,000
Journal entry - Depreciation
Debit : Depreciation expense, $2,135,000
Credit : Accumulated Depreciation, $2,135,000
Explanation:
Impairment loss is the excess of the Carrying Amount of an Asset over its Recoverable Amount.
Carrying Amount
Carrying Amount = Cost - Accumulated Depreciation
Depreciation Calculation (Straight line) : (Cost - Salvage Value) / Number of Useful life
2019 = ($12,200,000 - $0) / 8
= $1,525,000
2020 = $12,200,000 - $1,525,000 / 5
= $2,135,000
Note the change in useful life is applied from beginning of the year hence (4+1) years.Also the adjustment is only made in 2019 not retrospectively.
Carrying Amount = $12,200,000 - $1,525,000 - $2,135,000
= $ 8,540,000
Recoverable Amount
Is the higher of :
Fair Value less Cost to sell : $6,832,000 or,Value in use : $7,686,000Therefore Recoverable amount is $7,686,000
Impairment test
Carrying Amount : $ 8,540,000 > Recoverable amount : $7,686,000
The equipment is impaired.
Impairment loss is $ 8,540,000 - $7,686,000 = $854,000
Journal Entry - Impairment
Debit : Impairment Loss, $854,000
Credit: Accumulated Impairment Loss, $854,000
Journal entry - Depreciation
Debit : Depreciation expense, $2,135,000
Credit : Accumulated Depreciation, $2,135,000
g On July 1, Alton Co. issued an $60,500, 10%, 120-day note payable to Seller Co. Assume that the fiscal year of Alton Co. ends July 31. Using a 360-day year in your calculations, what is the amount of interest expense recognized by Alton in the current fiscal year? When required, round your answer to the nearest dollar.
Answer:
The interest expense is $521
Explanation:
The amount of interest expense for the fiscal year is the interest expense of 31 days which ,in other words the interest incurred only in the month of July ,calculated thus:
interest expense=days in the month/360days*interest rate*loan amount
interest expense=31/360*10%*$60,500=$ 521
The interest expense for the current fiscal year rounded to the nearest dollar amount is $ 521
Marcelino Co.’s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. 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 $29,000 $35,000
Direct labor 20,000 18,000
Applied overhead 10,000 9,000
Costs during April
Direct materials 135,000 220,000 $100,000
Direct labor 85,000 150,000 105,000
Applied overhead 42,500 75,000 52,500
Status on April 30 Finished (sold) Finished (unsold) In the process
a. Prepare journal entries to record the transactions of Marcelino Company during the month of April.
b. Calculate the total cost, and account classification for each job worked on during April.
c. Prepare a schedule of cost of goods manufactured for Marcelino Company during the month of April.
d. Calculate the gross profit on the sale of the job(s) during April.
Answer:
a. Prepare journal entries
J1
Raw Materials $500,000 (debit)
Cash $500,000 (credit)
J2
Factory Labor $363,000 (debit)
Salaries and Wages Accrued $363,000 (credit)
J3
Overheads $175,000 (debit)
indirect materials $50,000 (credit)
Indirect labor $23,000 (credit)
factory rent $32,000 (credit)
factory utilities $19,000 (credit)
factory equipment depreciation $51,000 (credit)
J4
Work in Process $181,500 (debit)
Overheads $181,500 (credit)
b. the total cost, and account classification for each job
Job 306 Job 307 Job 308
Direct materials 135,000 220,000 100,000
Direct labor 85,000 150,000 105,000
Applied overhead 42,500 75,000 52,500
Total Cost 262,500 445,000 257,500
c. Cost of goods manufactured for Marcelino Company
Job 306 $ 262,500
Job 307 $ 445,000
Job 308 $ 257,500
Total $ 965,000
d. the gross profit on the sale of the job(s)
Job 306
Sales $635,000
Less Cost of Goods Sold :
Opening Finished Inventory $0
Add Cost of Manufacture $262,500
Less Closing Finished Inventory $0 ($262,500)
Gross Profit $372,4500
Explanation:
Only Job 306 was sold, thus the gross profit is calculated on the sold job only.
Vail is one of the largest ski resorts in the United States. Suppose that on October 1, 2021, Vail sells gift cards (lift passes) for $100,000. The gift cards are redeemable for one day of skiing during the upcoming winter season. The gift cards expire on April 1, 2022. Customers redeem gift cards of $20,000 in December, $30,000 in January, $25,000 in February, and $15,000 in March.
1. Record the sale of gift cards on October 1, 2021.2. Record the redemption of gift cards as of December 31, 2021.3.Record the redemption of gift cards in 2022 by preparing a summary entry as of March 31, 2022.4.Record the redemption of gift cards in 2022 by preparing a summary entry as of March 31, 2022.
Answer:
Vail Journal entries
Oct 1,2021
Dr Cash 100,000
Cr Deferred Revenue 100,000
December 31,2021
Dr Deferred Revenue 20,000
Cr Sales Revenue 20,000
January 2022
Dr Deferred Revenue 30,000
Cr Sales Revenue 30,000
February 2022
Dr Deferred Revenue 25,000
Cr Sales Revenue 25,000
March 2022
Dr Deferred Revenue 15,000
Cr Sales Revenue 15,000
Explanation:
Deferred revenue are can be seen as the amount of money which is been earned for good and service which are yet to be delivered which is why it is often recorded as a liability until the delivery of good and service has taken place in which it will then be converted into revenue or asset.
Sales revenue can be seen income which is been received by a company or organisation for service rendered.
The journal entries in the books of Vail to record the sale and redemption of gift cards are as follows:
Journal Entries:
1. October 1, 2021
Debit Cash $100,000
Credit Gifts Cards Redeemable $100,000
To record the sale of gift cards.2. December 31, 2021
Debit Gifts Cards Redeemable $20,000
Credit Sales Revenue $20,000
To record the redemption of gift cards.3. March 31, 2022
Debit Gifts Cards Redeemable $70,000
Credit Sales Revenue $70,000
To record the summary of gift cards redeemed in 2022.4. March 31, 2022
Debit Gifts Cards Redeemable $70,000
Credit Sales Revenue $70,000
To record the summary of gift cards redeemed in 2022.Data Analysis:
October 1, 2021 Cash $100,000 Gifts Cards Redeemable $100,000
December 31, 2021 Gifts Cards Redeemable $20,000 Sales Revenue $20,000
January 31, 2022 Gifts Cards Redeemable $30,000 Sales Revenue $30,000
February 28, 2022 Gifts Cards Redeemable $25,000 Sales Revenue $25,000
March 31, 2022 Gifts Cards Redeemable $15,000 Sales Revenue $15,000
March 31, 2022 Gifts Cards Redeemable $70,000 Sales Revenue $70,000
Learn more: https://brainly.com/question/24852569
Compute the overhead variances for the month: variable overhead cost variance, variable overhead efficiency variance, fixed overhead cost variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable.
Answer:
A variance is favorable when the actual costs or actual quantity were lower than estimated.
Explanation:
We weren't provided with enough information to calculate each variance. I will provide with the formulas.
Variable manufacturing overhead rate (cost) variance= (standard rate - actual rate)* actual quantity
Variable overhead efficiency variance= (Standard Quantity - Actual Quantity)*Standard rate
Fixed overhead spending variance= (actual fixed overhead costs - allocated fixed overhead)
Manufacturing overhead volume variance= (Estimated manufacturing overhead rate*budgeted allocation base) - (Estimated manufacturing overhead rate* Actual amount of allocation base)
A variance is favorable when the actual costs or actual quantity were lower than estimated.
An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called: Multiple Choice Continuous improvement. Customer orientation. Just-in-time manufacturing. Theory of constraints. Total quality management.
Answer:
Just-in-time manufacturing.
Explanation:
A Just in Time (JIT) is a manufacturing control system in which no materials are purchased and no products are manufactured until they are needed.
A primary goal of the JIT production system is to eliminate inventories at every stage of production from raw materials to finished goods.
Raw materials are purchased only when need at some stage of production. Finished Goods are manufactured only as needed to fill customers orders.
Tremendous cost savings have been realized by many companies that have adopted the JIT approach.
During its first month of operation, the Quick Tax Corporation, which specializes in tax preparation, completed the following transactions.
July 1 Began business by making a deposit in a company bank account of $60,000, in exchange for 6,000 shares of $10 par value common stock.
July 3 Paid the current month's rent, $3,500 July 5 Paid the premium on a 1-year insurance policy, $4,200
July 7 Purchased supplies on account from Little Company, $1,000.
July 10 Paid employee salaries, $3,500
July 14 Purchased equipment from Lake Company, $10,000. Paid $2,500 down and the balance was placed on account. Payments will be $500.00 per month until the equipment is paid. The first payment is due 8/1. Note: Use accounts payable for the balance due.
July 15 Received cash for preparing tax returns for the first half of July, $8,000
July 19 Made payment on account to Lake Company, $500.
July 31 Received cash for preparing tax returns for the last half of July, $9,000
July 31 Declared and paid cash dividends of $600.
Required:
Prepare the financial statements for the Quick Tax Corporation as of July 31
Answer:
Trial Income Statement:
Service revenue $17,000
Rent expense ($3,500)
Insurance expense ($350)
Wages expense ($10,500)
Net income $2,650
*We need to adjust other expenses like supplies or utilities. I assumed the salaries paid were for a 10 days period since no one pays salaries in advance.
Trial Balance Sheet
Assets:
Cash $62,200
Supplies $1,000
Prepaid insurance $3,850
Equipment $10,000
Total Assets $77,050
Liabilities and Equity:
Accounts payable $8,000
Wages payable $7,000
Common Stock $60,000
Retained earnings $2,050
Total Liabilities and Equity $77,050
Explanation:
July 1
Dr Cash 60,000
Cr Common stock 60,000 (6,000 stocks $10 par value)
July 3
Rent expense 3,500
Cr Cash 3,500
July 5
Dr Prepaid insurance 4,200
Cr Cash 4,200
Adjusting entry July 31
Dr Insurance expense 350
Cr Prepaid insurance 350
July 7
Dr Supplies 1,000
Cr Accounts payable 1,000
July 10
Dr Wages expense 3,500
Cr Cash 3,500
Adjusting entry July 31
Dr Wages expense 7,000 ($3,500 x 2 10 day periods)
Cr Wages payable 7,000
July 14
Dr Equipment 10,000
Cr Cash 2,500
Cr Accounts payable 7,500
July 15
Dr Cash 8,000
Cr Service revenue 8,000
July 19
Dr Accounts payable 500
Cr Cash 500
July 31
Dr Cash 9,000
Cr Service revenue 9,000
Dr Retained earnings 600
Cr Dividends payable 600
Dr Dividends payable 600
Cr Cash 600
The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:
Date Transaction Number of Units Per Unit Total
Jan.1 Inventory 7,500 $75.00 $562,500
10 Purchase 22,500 85.00 1,912,500
28 Sale 11,250 150.00 1,687,500
30 Sale 3,750 150.00 562,500
Feb.5 Sale 1,500 150.00 225,000
10 Purchase 54,000 87.504, 725,000
16 Sale 27,000 160.00 4,320,000
28 Sale 25,500 160.00 4,080,000
Mar.5 Purchase 45,000 89.50 4,027,500
14 Sale 30,000 160.00 4,800,000
25 Purchase 7,500 90.00 675,000
30 Sale 26,250 160.00 4,200,000
Required:
a. Record the inventory, purchases, and cost of goods sold data in a perpetual inventory record.
b. Determine the total sales, the total cost of goods sold, and the gross profit from sales for the period.
Answer:
Using LIFO:
TOTAL Sales : $19,875,500
COGS = $11,021,250
GROSS PROFIT = $8,853,750
Explanation:
KINDLY CHECK ATTACHED PICTURE
Chapman Company, a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The comparative balance sheet and income statement for Chapman as of May 31, 2017, are as follows. The company is preparing its statement of cash flows.
CHAPMAN COMPANY
COMPARATIVE BALANCE SHEET
AS OF MAY 31
2017 2016
Current assets
Cash $28,250 $20,000
Accounts receivable
75,000 58,000
Inventory 220,000 250,000
Prepaid expenses 9,000 7,000
Total current assets 332,250 335,000
Plant assets 600,000 502,000
Less: Accumulated 150,000 125,000
depreciation—plant assets
Net plant assets 450,000 377,000
Total assets $782,250 $712,000
Current liabilities
Accounts payable $123,000 $115,000
Salaries and wages payable 47,250 72,000
Interest payable 27,000 25,000
Total current liabilities 197,250 212,000
Long-term debt
Bonds payable 70,000 100,000
Total liabilities 267,250 312,000
Stockholders’ equity
Common stock, $10 par 370,000 280,000
Retained earnings 145,000 120,000
Total stockholders’ equity 515,000 400,000
Total liabilities and stockholders’ equity$782,250 $712,000
CHAPMAN COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED MAY 31, 2017
Sales revenue $1,255,250
Cost of goods sold 722,000
Gross profit 533,250
Expenses
Salaries and wages expense 252,100
Interest expense 75,000
Depreciation expense 25,000
Other expenses 8,150
Total expenses 360,250
Operating income 173,000
Income tax expense 43,000
Net income $130,000
The following is additional information concerning Chapman’s transactions during the year ended May 31, 2017.
1. All sales during the year were made on account.
2. All merchandise was purchased on account, comprising the total accounts payable account.
3. Plant assets costing $98,000 were purchased by paying $28,000 in cash and issuing 7,000 shares of stock.
4. The "other expenses" are related to prepaid items.
5. All income taxes incurred during the year were paid during the year.
6. In order to supplement its cash, Chapman issued 2,000 shares of common stock at par value.
7. Cash dividends of $105,000 were declared and paid at the end of the fiscal year.
Prepare a statement of cash flows for Chapman Company for the year ended May 31, 2017, using the direct method. (A reconciliation of net income to net cash provided is not required.) (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Using the indirect method, calculate only the net cash flow from operating activities for Chapman Company for the year ended May 31, 2017. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answer:
$28,250
Explanation:
Chapman Company Statement of Cashflow using Indirect method
Cash flow from Operating Activities:
Net income$130000
Adjustment to reconcile net income to cash basis:
Depreciation expense $25000
Increase Account receivable ($17000)
Decrease Inventory$30000
Increase Prepaid Expense ($2000)
Increase Account payable $8000
Decrease Salaries & Wages Payable ($24750)
Increase Interest payable $2000
Balance $21250
Cash flow from Operating Activities $151250
Cash flow from Investing Activities:
Cash paid for purchase of plant assets ($28000)
Cash flow from Investing Activities ($28000)
Cash flow from Financing Activities:
Issue common stock (2000 * $10)$20000
Repaid Bonds($30000)
Cash dividend paid ($105000)
Cash flow from Financing Activities ($115000)
Net cash Increase/(decrease) $8250
Add: Beginning Cash Balance $20000
Ending Cash Balance $28,250
The fiscal year ends December 31 for Lake Hamilton Development. To provide funding for its Moonlight Bay project, LHD issued 7% bonds with a face amount of $630,000 on November 1, 2021. The bonds sold for $567,653, a price to yield the market rate of 8%. The bonds mature October 31, 2041 (20 years). Interest is paid semiannually on April 30 and October 31 and is determined using the effective interest method. Required: 1. What amount of interest expense related to the bonds will LHD report in its income statement for the year ending December 31, 2021
Answer:
$7,568.67
Explanation:
The computation of interest expenses is shown below:-
Date Cash payment Effective Increase Balance
interest in balance
11/1/2021 $567,653
30/4/2022 $22,050 $22,706 $656 $568,309
($656 + $567,653)
30/10/2022 $22,050 $22,732 $682 $568,991
30/4/2023 $22,050 $22,760 $710 $569,701
Interest expenses related to the bonds = $22,706 × 2 ÷ 6
= $7,568.67
Working Note :-
Cash Payment = Face amount × Issued bonds percentage × 6 months ÷ 12 months
= $630,000 × 7% × 6 ÷ 12
= $22,050
Effective interest for 30/4/2022 = Sold bonds × Market rate × 6 months ÷ 12 months
= $567,653 × 8% × 6 ÷ 12
= $22,706
Effective interest for 30/10/2022
= $568,309 × 8% × 6 ÷ 12
= $22,732
Effective interest for 30/4/2023
= $568,991 × 8% × 6 ÷ 12
= $22,760
Ataxia Fitness center is considering an investment in some additional weight training equipment. The equipment has an estimated useful life of 10 years with no salvage value at the end of 10 years. Ataxia's internal rate of return is 14%. It's discount rate is also 14%. The payback period on this equipment is closest to:___________.
a. 2.70 years
b. 1.90 years
c. 5.22 years
d. 3.70 years
Answer:
6.71 years
Explanation:
Solution
Recall that,
Ataxia Fitness center has an equipment with a useful life estimated to be = 10 years
No Savage value at the end of = 10 years
Internal rate of return of equipment = 8%
rate of discount = 8%
Now,
From the Exhibit 13B-1 and Exhibit 13B-2,
Let the initial outlay be $50000
The present value of inflows at irr be =present value of outflows.
let value of present annuity=Annuity[1-(1+interest rate)^-time period]/rate
Thus,
Be entering the values we get
Annuity[1-(1.08)^-10]/0.08 =50000
5000 =Annuity[1-(1.08)^-10]/0.08
50000=Annuity*6.710081399
Annuity=50000/6.710081399 = =$7451.474435
So, the period of payback =initial outlay/annual cash flows
=(50000/7451.474435)
=6.71 years
Therefore the pay back period on this equipment is = 6.71 years
Calculate Payroll
An employee earns $30 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. If the employee worked 54 hours during the week. Assume that the social security tax rate is 6.0%, the Medicare tax rate is 1.5%, and the employe's federal income tax withheld is $295.
a. Determine the employe's gross pay for the week.
b. Determine the employee's net pay for the week. Round your answer to two decimal places.
Answer:
A.1830
B.$1397.75
Explanation:
A.Gross pay
Formula for Gross pay
Gross pay = regular pay + overtime pay
= (40*30)+(14*30*1.5)
=1200+630
= $1830
Part B
B.Net pay
Formula for Net pay
Net pay = gross pay – social security tax – medicare tax – federal income tax
= 1830-(1830*6.0%)-(1830*1.5%)-295
=1830-109.8-27.45-295
= $1397.75
Red Hot Chili Peppers Co. had the following activity in its most recent year of operations.
Classify the items as (1) operating - add to net income; (2) operating - deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method.
(a) Purchase of equipment.
(b) Redemption of bonds payable.
(c) Sale of building.
(d) Depreciation.
(e) Exchange of equipment for furniture.
(f) Issuance of capital stock.
(g) Amortization of intangible assets.
(h) Purchase of treasury stock.
(i) Issuance of bonds for land
(j) Payment of dividends.
(k) Increase in interest receivable on notes receivable.
(l) Pension expense exceeds amount funded.
Answer:
(a) Purchase of equipment: investing; it is an outflow.
(b) Redemption of bonds payable: financing; it is an outflow.
(c) Sale of building: investing; it is an inflow.
(d) Depreciation: operating - add to net income.
(e) Exchange of equipment for furniture: significant noncash investing and financing activities.
(f) Issuance of capital stock: financing; it is an outflow.
(g) Amortization of intangible assets: operating - add to net income.
(h) Purchase of treasury stock: financing; it is an outflow.
(i) Issuance of bonds for land: significant noncash investing and financing activities.
(j) Payment of dividends: financing; it is an outflow.
(k) Increase in interest receivable on notes receivable: operating - deduct from net income.
(l) Pension expense exceeds amount funded: operating - add to net income.
Explanation:
A financial statement in accounting are written reports that measures an organization's financial performance, strength and liquidity over a specific accounting period. Financial performance is a summary of how an organization incurs both revenues and expenses with respect to its operating and non-operating activities.
The indirect method of cash-flow statements, adjusts net income for activities or items that affects reported net income or loss rather than cash.
Mills Corporation acquired as an investment $260 million of 6% bonds, dated July 1, on July 1, 2021. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $300 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2021, was $280 million.
Required: 1. & 2. Prepare the journal entry to record Mills' investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate.
3. Prepare the journal entry by Mills to record any fair value adjustment necessary for the year ended December 31, 2021.
4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2022, for $314 million. Prepare the journal entries required on the date of sale.
Answer:
1.
Dr Investment in Bonds 260
Dr Premium on Investment in Bonds 40
Cr Cash $300
2.
Dr Cash$7.8
Cr Premium on Investment in Bonds $1.8
Cr Interest Revenue $6
3.
Dr Investment in bonds $260
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds -$1.8
Cr Carrying Value $298.2
4.
Dr Cash $314
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds amortized -$1.8
Dr Investment in bonds $260
Cr Gain due to investment sale $15.8
( $260+$40-1.8)-314
Explanation:
Mills Corporation Journal Entry ( $ million)
1.
Dr Investment in Bonds 260
Dr Premium on Investment in Bonds 40
(300 -260)
Cr Cash $300
2.
Dr Cash
($260 million X 6% / 2) $7.8
Cr Premium on Investment in Bonds $1.8
Cr Interest Revenue
($300 million X 4% / 2) $6
3.
Dr Investment in bonds $260
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds -$1.8
Cr Carrying Value $298.2
($260+$40-$1.8
4.
Dr Cash $314
Dr Premium on Investment in Bonds $40
Dr Premium on investment in Bonds amortized -$1.8
Dr Investment in bonds $260
Cr Gain due to investment sale $15.8
( $260+$40-1.8)-314
Until recently, many developing countries:______.
a. sealed themselves off from foreign investment.
b. were quite open to foreign investment.
c. encouraged foreign portfolio investment but discouraged foreign direct investment.
d. encouraged foreign direct investment but discouraged foreign portfolio investment.
Answer:
a. sealed themselves off from foreign investment.
Explanation:
Traditionally it was believed that foreign direct investment means giving up the country's sovereignty to the foreign nation, on the other hand, the current people see it as a gift to the economy of a country. It becomes a known fact today that the world's economy so closely intertwined, that developing countries have no choice but to accept foreign direct investment. Opening up the domestic markets results in benefits for several nations because they might not have the resources to start profitable operations in these sectors.
Suppose the 8-year spot interest rate is 8 percent and the 4-year spot rate is 7 percent. The forecasted 2-year rate four years from now is 6.25 percent. What is the implied forward rate on a 2-year bond originating 6 years from now? {HINT: Under the expectations hypothesis, in equilibrium an investor with an 8-year holding period will be indifferent between investing in an 8-year bond or a combination of securities over the same period.}
Answer:
11.84%
Explanation:
8-year spot interest rate is 8 percent
4-year spot rate is 7 percent
Forecasted 2-year rate
(1.08)^8 =(1.07)^4 ×(1.0625)^2(1 + t+5f2)^2
(1+t+5f2)^2=(1.08)^8 /(1.07)^4 ×(1.0625)^2
=1.8509/1.3107×1.1289
=(1.8509/1.4796)^1/2
=(1.2509^1/2)-1
t+5f2=1.1184-1
=0.1184 ×100
=11.84%
