Answer:
The balance sheet
Explanation:
In a balance sheet, one can see the information on the assets of the company, their liabilities and the equity brought by the shareholders at any particular point in time.
In some cases, it can be referred to as statement of net worth because one can be able to see what the company owns and owes and how the assets are financed either as equity or debt.
Two manufacturers, denoted 1 and 2, are competing for 100 identical customers. Each manufacturer chooses both the price and quality of its product, where each variable can take any nonnegtive real number. Let pi and xi denote, respectively, the price and quality of manufacturer i's product. The cost to manufacturer i of producing for one customer is 10+5xi . Note in this expression that the cost is higher when the quality is higher. If manufacturer i sells to qi customers, then its total cost is qi(10+5xi). Each cutomer buys from the manufacturer who offers the greatest value, where the value of buying from manufacturer i is 1000+ xi - pi ; higher quality and lower price means more value. A manufacturer's is qi( pi- 10 - 5xi ). If both manufacturer offers the same value, then 50 customers buy from each manufacturer. If one manufacturer offers higher value, then 100 customers buy from it.
Find all symmetric Nash equilibria.
Answer:
Nash equilibrium will occur at the following conditions P1 = P2 = 10 and x1 = x2 = 0.
Explanation:
The term or concept known as the Nash equilibria is very important and it is often used in the determination of the kind of price strategies companies that are competing against one another will use in order to acquire more customers than the others.
So, in this question/problem we are given that there are two manufacturer that is manufacturer 1 and manufacturer 2. Also, the total number of customers both manufacturers are competing for is equal to 100.
Kindly note that we are given from the question that ''Each manufacturer chooses both the price and quality of its product, where each variable can take any non-negative real number''
If each of the manufacturer has 50 customers each that is symmetric condition.
Assuming we have a condition or situation where p1 is less than p2 for manufacturer 1, it means that manufacture 1 lessens its price, therefore manufacturer 1 will have all all the profit = 100(p1 - 10 - 5x1).
Assuming manufacturer 1 reduces both the quality and the price this time around to the point that it is justifiable to lower the price because of the quality , it means that we will have 1000 + (x1 = 0) + (p1 - compensation m).
For any of the manufacturer, If m> x' and we have that x1 = x'>0[ which is for the quality], then, the profit will be 100(10 + 5x'- m -10).
Also, For any of the manufacturer, if we have x'<m<5x' and x1 for the representation of quality, then, Customers will buy from both manufacturer making m<5x'.
Therefore, Nash equilibrium will occur at the following conditions: P1 = P2 = 10 and x1 = x2 = 0.
Bramble Corp. will receive $18500 today (January 1, 2020), and also on each January 1st for the next five years (2021 – 2025). What is the present value of the six $18500 receipts, assuming a 10% interest rate?
Answer:
21
Explanation:
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When a company is in financial difficulty and cannot fully pay all of its creditors, the first lenders to be paid are the ________. A) stockholders
Answer:
Senior debtholder
Explanation:
In a case when the company is not able to pay the pull amount to its creditors so the first lender is senior debt holder as it became the priority to the company i.e. first the amount is paid to them and the amount i.e. remaining would be paid to others as the senior debtholders are secured as if we compared with the other type of debtholders in terms of collateralized of assets
Crawford Corporation incurred the following transactions:1. Purchased raw materials on account $47,000.2. Raw Materials of $44,200 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $7,300 was classified as indirect materials.3. Factory labor costs incurred were $60,100, of which $51,000 pertained to factory wages payable and $9,100 pertained to employer payroll taxes payable.4. Time tickets indicated that $54,400 was direct labor and $5,700 was indirect labor.5. Manufacturing overhead costs incurred on account were $83,600.6. Depreciation on the company's office building was $8,600.7. Manufacturing overhead was applied at the rate of 160% of direct labor cost.8. Goods costing $94,800 were completed and transferred to finished goods9. Finished goods costing $81,800 to manufacture were sold on account for $110,300.Required:Journalize the above transactions.
Answer:
Crawford Corporation
General Ledger
1.
Raw Materials $47,000 (debit)
Account Payable $47,000 (credit)
2.
Work In Process : Direct Materials $36,900 (debit)
Work In Process : Indirect Materials $7,300 (debit)
Raw Materials $44,200 (credit)
3.
Work In Process $51,000 (debit)
Salaries Expenses $9,100 (debit)
Salaries Payable $60,100 (credit)
4.
Work In Process : Direct Labor $54,400 (debit)
Work In Process : Indirect Labor $5,700 (debit)
Salaries Expenses $9,100 (debit)
Salaries Payable $60,100 (credit)
5.
Overheads $83,600 (debit)
Accounts Payable $83,600 (credit)
6.
Depreciation Expense - Building $8,600 (debit)
Accumulated Depreciation - Buildings $8,600 (credit)
7.
Work In Process $87,040 (debit)
Overheads $87,040 (credit)
8.
Finished Goods $94,800 (debit)
Work In Process $94,800 (credit)
9.
Accounts Receivable $110,300 (debit)
Cost of Goods Sold $81,800 (debit)
Sales Revenue $110,300 (credit)
Finished Goods $81,800 (credit)
Explanation:
See the Journal entries for Crawford Corporation and their respective transaction number recorded above.
The accounting for bond premiums is not the mirror image of that for the bond discounts. Pacific Independent School District issued $100 million of general obligation bonds to finance the construction of new schools. The bonds were issued at a premium of $0.6 million.
1. Prepare the capital projects fund journal entries to record the issue of the bonds and the transfer of the premium to an appropriate fund.
2. Suppose, instead, that the bonds were issued at a discount of $0.6 million but that the project will still cost $100 million. Prepare the appropriate entries.
a. Contrast the entries in this part with those in part 1.
b. Indicate the options available to the school district, and state how they would affect the entries required of the district.
c. Suppose that the government chose to finance the balance of the project with general revenues. Prepare the appropriate capital projects fund entry.
Answer:
1. Dr Cash$100,600,000
Cr Bond proceeds $100,000,000
Cr Bond proceeds $600,000
Dr Nonreciprocal transfer of bond premium to debt service fund $600,000
Cr Due to debt service fund/Cash $600,000
2. Dr Cash $994,000,000
Dr Other financing sources-bond proceeds(Bond discount)$600,000
Cr Other financing sources-bond proceeds(Face value)$100,000,000
2a. In a situation where the bonds are been issued at a discount the debt services will have unavailable resources that they would send to the capital project fund.
2b. Both the Bonds premiums and that of the discount will be an issue reason been that the uncertainly of the amount of cash or money that are in excess will have to be disposed off as well as the ways of compensating for the cash deficiency
2c. Dr Due from the general fund $600,000
Cr Other financing use- nonreciprocal Transfer from the general fund $600,000
Explanation:
1.Preparation of the capital projects fund journal entries
Dr Cash$100,600,000
($100,000,000+$600,000)
Cr Bond proceeds (Face value amount)$100,000,000
Cr Bond proceeds (Bond premium amount)$600,000
(To record issuance of bonds sold at a premium)
Dr Nonreciprocal transfer of bond premium to debt service fund $600,000
Cr Due to debt service fund/Cash $600,000
(To record the premium payable to the debt service fund)
2. Preparation of the Journal entries.
suppose the bonds were issued at a discount of $0.6 million in which the project will still cost $100 million.
Dr Cash $994,000,000
($100,000,000-$600,000)
Dr Other financing sources-bond proceeds(Bond discount)$600,000
Cr Other financing sources-bond proceeds(Face value)$100,000,000
(To record the issue of bonds at a discount)
2a. When Contrasting the Journal entries in this part with those in part 1 this means that in a situation where the bonds are been issued at discount the debt services will have unavailable resources that they would send to the capital project fund.
2b. The options that are available to the school district and how they would affect the entrees required of the district is that both Bonds premiums as well as that of the discount will be an issue reason been that the uncertainly of the amount of cash or money that are in excess will have to be disposed off as well as the the ways of compensating for the cash deficiency
2c. Preparation of the appropriate capital projects fund Jounal entry
Dr Due from the general fund$600,000
Cr Other financing use- nonreciprocal Transfer from the general fund $600,000
On January 1, 2021, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 3% of Taco King's sales revenue, with a quarterly sales minimum of $600,000. Payments at the beginning of each quarter are based on previous quarter sales. During the previous 5-year period, Taco King has generated quarterly sales of over $750,000. Fogelman's interest rate, known by Taco King, was 4%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. Prepare the journal entries for Taco King at the beginning of the lease at January 1, 2021.
2. Prepare the journal entries for Taco King at April 1, 2021. First quarter sales were $760,000. Amortization is recorded quarterly.
Answer:
Jan 1st, 2021 entry:
Equipment 746,168 debit
Lease Liability 723,668 credit
Cash 22,500 credit
April 1st, 2021 entry:
Interest expense 7,537 debit
Lease Liability 15,263 debit
Cash 22,800 credit
Explanation:
We will assume a 750,000 sales revenue per quarter. As this was their historical and expected value:
750,000 x 3% = 22,500 per quarter
Now, we solve for the present value of the lease payment:
[tex]C \times \frac{1-(1+r)^{-time} }{rate}(1+r) = PV\\[/tex]
C 22,500
time 40 (10 years x 4 quarter per year)
rate 0.01 (4% annual / 4 quarters)
[tex]22500 \times \frac{1-(1+0.01)^{-40} }{0.01}(1+0.01) = PV\\[/tex]
PV $746,168.2419
we subtract the first payment of 22,500
lease liability reocrded in the enrty: 723.668
As lease sales were 760,000
lease payment: 760,000 x 3% = 22,800
less expected of 22,500 = 300 additional interest expense
interest expense: 723,668 x 0.01 = 7,237 + 300 = 7,537
amortization on lease liability: 22,800 -7,537 = 15,263
The following is a list of accounts and adjusted amounts for Rollcom, Inc., for the fiscal year ended September 30, 2018. The accounts have normal debit or credit balances.
Accounts Payable $39,000
Accounts Receivable 66,400
Accumulated Depreciation 21,400
Cash 80,200
Common Stock 94,700
Equipment 90,600
Income Tax Expense 10,490
Notes Payable (long-term) 1,490
Office Expenses 6,290
Rent Expense 164,100
Retained Earnings 99,790
Salaries and Wages Expense 128,600
Sales Revenue 325,400
Supplies 35,100
Required:
Prepare an adjusted trial balance at September 30, 2018.
Answer:
DEBIT SIDE $581,780
CREDIT SIDE $581,780
Explanation:
Preparation of adjusted Trial balance
Trial balance at September 30, 2018
DEBIT SIDE
Cash 80,200
Account receivable 66,400
Supplies 35,100
Equipment 90,600
Salaries and wages expense 128,600
Rent expense 164,100
Office expense 6,290
Income tax expense 10,490
TOTAL $581,780
CREDIT SIDE
Accumulated depreciation 21,400
Account payable 39,000
Notes payable 1,490
Common Stock 94,700
Retained earnings 99,790
Sales revenue 325,400
TOTAL $581,780
Below are cash transactions for a company, which provides consulting services related to mining of precious metals.
a. Cash used for purchase of office supplies, $1,600.
b. Cash provided from consulting to customers, $42,600.
c. Cash used for purchase of mining equipment, $67,000.
d. Cash provided from long-term borrowing, $54,000.
e. Cash used for payment of employee salaries, $23,400.
f. Cash used for payment of office rent, $11,400.
g. Cash provided from sale of equipment purchased in c. above, $21,900.
h. Cash used to repay a portion of the long-term borrowing in d. above, $37,000.
i. Cash used to pay office utilities, $3,700.
j. Purchase of company vehicle, paying $9,400 cash.
Required:
Calculate cash flows from operating activities.
Answer:
Cash Flow Statement
Cash Flow from Operating Activities
Cash received from customers $42,600
Cash payment to salaries -$23,400
Cash used for purchase of office supplies -$1,600
Office rent paid -$11,400
Payment for office utilities -$3,700
Net Cash Inflow from Operating activities $2,500
Wholemark is an Internet order business that sells one popular New Year greeting card once a year. The cost of the paper on which the card is printed is $0.40 per card, and the cost of printing is $0.10 per card. The company receives $3.75 per card sold. Since the cards have the current year printed on them, unsold cards have no salvage value. Their customers are from the four areas: Los Angeles, Santa Monica, Hollywood, and Pasadena. Based on past data, the number of customers from each of the four regions is normally distributed with mean 2,300 and standard deviation 200. (Assume these four are independent.)
What is the optimal production quantity for the card?
Answer:
9644
Explanation:
cost of paper on which a card is printed = $0.40 per card
cost of printing = $0.10 per card
profit made per card sold = $3.75
number of areas where customers are located (n)= 4
mean of customers from each region = 2300
standard deviation for each region = 200
note : each region is independent
The optimal production quantity for the card can be calculated going through these steps
first we determine
the cost of card = $0.10 + $0.40 = $0.50
selling value = $3.75
salvage value = 0
next we calculate for the z value
= ( selling value - cost of card) / ( selling price - salvage value )
= ( 3.75 - 0.50 ) / 3.75 = 0.8667
Z( 0.8667 ) = 1.110926 ( using excel formula : NORMSINV ( 0.8667 )
next we calculate
u = n * mean demand
= 4 * 2300 = 9200
б = [tex]200\sqrt{n}[/tex] = 200 * 2
= 400
Hence optimal production quantity for the card
= u + Z (0.8667 ) * б
= 9200 + 1.110926 * 400
= 9644.3704
≈ 9644
The revenue recognition principle states that: Multiple Choice Revenue should be recognized in the period goods and services are provided. Revenue should be recognized in the period the cash is received. Revenue should be recognized in the balance sheet. Revenue is a component of common stock.
Answer:
Revenue should be recognized in the period goods and services are provided.
Explanation:
IFRS 15 requires revenue to be recognized when control of goods or services has been made to the customer. Control is when all the risks and benefits associated with the product or service has been transferred to the customer.
The following events took place for Rushmore Biking Inc. during February, the first month of operations as a producer of road bikes:
Purchased $400,000 of materials.
Used $362,100 of direct materials in production.
Incurred $104,200 of direct labor wages.
Applied factory overhead at a rate of 42% of direct labor cost.
Transferred $483,700 of work in process to finished goods.
Sold goods with a cost of $460,300.
Revenues earned by selling bikes, $761,600.
Incurred $154,800 of selling expenses.
Incurred $75,300 of administrative expenses.
Required:
Prepare the income statement for Rushmore Biking for the month ending February 28
Answer: See attachment
Explanation:
Note that in the attachment,
Gross profit was the difference between the revenue and the cost of goods sold. This is:
= 761600 - 460300
= 301300
The selling and administrative expenses was the addition of the selling expense and the administrative expenses.
Check the attachment for further details.
Which best describes why investing can be such a challenge?
All investments involve major risks.
There is never a sure way to predict the likelihood of success.
There are no guaranteed investments.
The market is totally unpredictable.
Answer:
C. There are no guaranteed investments.
Explanation:
There are different kinds of investment. The option that best describes why investing can be such a challenge is that there are no guaranteed investments.
What are the factors that influence risk for an investment?There are two factors that is known to have huge influence on risk for an investment. They are;
The duration of the investment. The history of the investment.Investment can be a short- or long-term basis with no guarantee for profit or loss due to factors influencing it.
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The following ledger accounts are used by the Heartland Race Track
Accounts Receivable
Prepaid Advertising
Prepaid Rent
Unearned Sales Revenue
Sales Revenue
Advertising Expense
Rent Expense
For each of the following transactions below, prepare the journal entry (if one is required) to record the initial transaction and then prepare the adjusting entry, if any, required on November 30, the end of the fiscal year.
A) On November 1, paid rent on the track facility for three months, $180,000.
B) On November 1, sold season tickets for admission to the racetrack. The racing season is year-round with 25 racing days each month. Season ticket sales totaled $1,152,000.
C) On November 1, borrowed $300,000 from First National Bank by issuing a 6% note payable due in three months.
D) On November 5, programs for 20 racing days in November, 25 racing days in December and 15 racing days in January were printed for $3,600.
E) The accountant for the concessions company reported that gross receipts for November were $168,000. 10% is due to Heartland and will be remitted by December 10.
Prepare the journal entry (if one ls required) to record the Initial transaction.
Prepaid Rent 150,000
Cash 150,000
Cash 960,000
Unearned Sales
Revenue 960,000
Cash 250,000
Notes Payable 250,000
Prepaid
Advertising 3,000
Cash 3,000
Answer:
Heartland Race Track
Journal Entries:
A. November 1:
Debit Prepaid Rent $180,000
Credit Cash Account $180,000
To record the payment of rent for three months.
B. November 1:
Debit Cash Account $1,152,000
Credit Unearned Sales Revenue $1,152,000
To record the sale of year-round season tickets.
C. November 1:
Debit Cash Account $300,000
Credit Notes Payable $300,000
To record the issue of 6% note payable for 3 months.
D. November 5:
Debit Prepaid Advertising $3,600
Credit Cash Account $3,600
To record the printing of programs for three months.
E. Debit Accounts Receivable (Concession) $16,800
Credit Sales Revenue $16,800
To record concessions fees.
November 30: Adjusting Entries:
A. Debit Rent Expense $60,000
Credit Prepaid Rent $60,000
To adjust for rent expense for the month.
B. Debit Unearned Sales Revenue $96,000
Credit Sales Revenue $96,000
To record the earned revenue for season tickets for the month.
C. Debit Interest Expense $1,500
Credit Interest Payable $1,500
To accrue interest for one month on note payable.
D. Debit Advertising Expense $1,200
Credit Prepaid Advertising $1,200
To record advertising expense for the month.
Explanation:
Heartland Race Track will find the use of the general and adjusting journals helpful in its accounting records. They provide the needed guidance to ensure that the accounts involved in every business transaction are properly identified and entries are correctly recorded on the correct side of the accounts. Transactions are recorded following the ubiquitous accounting equation, the accrual concept, and matching principle of generally accepted accounting principles.
Amount of an Annuity John Goodheart wishes to provide for 6 annual withdrawals of $3,000 each beginning January 1, 2029. He wishes to make 10 annual deposits beginning January 1, 2019, with the last deposit to be made on January 1, 2028. Required: If the fund earns interest compounded annually at 10%, how much is each of the 10 deposits
Answer and Explanation:
Answer and explanation attached
The following information relates to Sheridan Company for the year 2022.
Retained earnings, January 1, 2022 $40,320
Advertising expense $1,510
Dividends during 2022 4,200
Rent expense 8,740
Service revenue 52,500
Utilities expense 2,600
Salaries and wages expense 23,520
Other comprehensive income (net of tax) 340
Required:
a. After analyzing the data, compute net income.
b. Prepare a comprehensive income statement for the year ending December 31, 2022.
Answer:
a. Computation of net income
Particulars Amount
Service revenue $52,500
Less: Expenses
Salaries and wages expenses ($23,520)
Utilities expense ($2,600)
Rent expense ($8,740)
Advertising expense ($1,510)
Net Income $16,130
b. Computation of comprehensive income statement
Particulars Amount
Net Income $16,130
Add: Other Comprehensive Income $380
Comprehensive Income $16,470
Note: Dividend will not be included as it forms part of Income statement
A competitive firm maximizes profit by choosing a level of output where the world price is equal to the firm's
Answer: c. Marginal Cost
Explanation:
A Competitive firm operates in a market where they are price takers. This means that the price they charge is equal to both their average revenue and their Marginal Revenue.
P = MR = AR
Companies maximise profit at a point where Marginal Revenue equals Marginal Cost because at this point, resources are being fully utilized.
If the Competitive firm's Price is the same as its Marginal Revenue this means that to maximise profits, the firm should choose an output level where the price is equal to the marginal cost.
Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $200,000 for a 40% ownership interest. Mickayla is contributing a building with a value of $200,000 and a tax basis of $150,000 for a 40% ownership interest, and Taylor is contributing legal services for a 20% ownership interest. Using the research skills you learned in Week 1, access RIA Checkpoint and research what amount of gain/income each owner is required to recognize under each of the following alternative situations?
a. MMT is formed as a C corporation.
b. MMT is formed as an S corporation.
c. MMT is formed as LLC.
Answer:
a. MMT is formed as a C corporation.
Mickey and Mickayla will not recognize any gain, while Taylor must recognize $100,000 as ordinary income. Mickey and Mickayla's exchange classifies under §351, but Taylor's doesn't.
b. MMT is formed as an S corporation.
Mickey and Mickayla will not recognize any gain, while Taylor must recognize $100,000 as ordinary income. Mickey and Mickayla's exchange classifies under §351, but Taylor's doesn't.
c. MMT is formed as LLC.
Mickey and Mickayla will not recognize any gain, while Taylor must recognize $100,000 as ordinary income. Mickey and Mickayla's exchange classifies under §721, but Taylor's doesn't.
Explanation:
Basically §351 and §721 are very similar except that one applies to corporations and the other applies to partnerships and LLCs. No gain will be recognize when assets are transferred in exchange for equity, and the people involved in the exchange can control the company.
Gnomes R Us just paid a dividend of $1.90 per share. The company has a dividend payout ratio of 25 percent. If the PE ratio is 16.9 times, what is the stock price
Answer:
Stock price=$128.44
Explanation:
Calculation for stock price
First step is to calculate for dividend payout ratio using this formula
Dividend payout ratio=Dividend payout/Earnings
Let plug in the formula
Earnings=($1.90/0.25)
Earnings=$7.6
Now let calculate for PE ratio using this formula
PE ratio=Stock price/EPS
Let plug in the formula
Stock price=$7.6*16.9times
Stock price=$128.44
Therefore Stock price will be $128.44
Eduardo has been reading about the use of drone technology in recent military conflicts and is not quite sure what to think. On the one hand, the use of drones means that military missions can be executed without putting American lives at risk. On the other hand, this very fact means that our political leaders might be quicker to resort to military solutions when other solutions might be available. Eduardo is also concerned about other effects of fully mechanized battle operations. For instance, unlike a human soldier, a drone can neither hear nor sympathize with a mother pleading for the life of her innocent child. Eduardo has decided to research the topic of military drones in more detail and write an essay in which he decides whether the use of drone technology is a positive or negative development in the history of American military action. Which type of argument will Eduardo be making?
a. Argument of fact
b. Argument of definition
c. Argument of evaluation
d. Policy argument
Answer:
c. Argument of evaluation
Explanation:
Eduardo will be making a decision on "whether the use of drone technology is a positive or negative development in the history of American military action." This is a judgement call. And he will be determining whether or not drone usage is good or bad. So this is purely an argument of evaluation. The argument is not of fact or definition or a policy argument, but one in which he will establish his opinion on the issue of the use of drone technology in the military.
At January 1, 2021, Cafe Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $29,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Crescent at a cost of $207,000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $94,113.) Crescent seeks a 12% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease.
Required:
a. What will be the effect of the lease on Cafe Med's earnings for the first year (ignore taxes)?
b. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Café Med (ignore taxes)?
Answer:
Café Med
a. Café Med's earnings for the first year will be reduced by $58,000 (Operating lease expense for January 1 and December 31, 2021).
b. In Café Med's Balance Sheet, at the end of the first year, there will be a liability balance or Lease Expense Payable of $29,000 for the balance due to be paid on December 31, 2021.
Explanation:
Lease annual payments = $29,000
First payment date = January 1, 2021
Subsequent payment dates = December 31, 2021 to 2028.
Period of lease agreement = 9 years < 75% (9/13)
Cost of equipment to Crescent = $207,000
Lifespan of equipment = 13 years
Residual value at end of the lease term = $94,113
b) Café Med will recognize this lease arrangement as an operating lease. This is based on periodic rental payment on a straight-line basis, which is recorded as an operating lease expense. The liability arising will be for unpaid rentals at the end of the accounting period.
The general ledger of Pipers Plumbing at January 1, 2018, includes the following account balances:
Accounts Debits Credits
Cash $ 4,500
Accounts receivable 9,500
Supplies 3,500
Equipment 36,000
Accumulated depreciation $ 8,000
Accounts payable 6,000
Utilities payable 7,000
Deferred revenue 0
Common stock 23,000
Retained earnings 9,500
Totals $ 53,500 $ 53,500
The following is a summary of the transactions for the year:_______.
1. January 24 Provide plumbing services for cash, $18,000, and on account, $63,000.
2. March 13 Collect on accounts receivable, $51,000.
3. May 6 Issue shares of common stock in exchange for $10,000 cash.
4. June 30 Pay salaries for the current year, $32,600.
5. September 15 Pay utilities of $6,200 from 2020 (prior year).
6. November 24 Receive cash in advance from customers, $9,200.
7. December 30 Pay $2,600 cash dividends to stockholders.
The following information is available for the adjusting entries.
Depreciation for the year on the machinery is $7,200.
Plumbing supplies remaining on hand at the end of the year equal $1,000.
Of the $9,200 paid in advance by customers, $6,600 of the work has been completed by the end of the year.
Accrued utilities at year-end amounted to $6,400.
Answer:
Journal entries
1. January 24 Provide plumbing services for cash, $18,000, and on account, $63,000.
Dr Cash 18,000
Dr Accounts receivable 63,000
Cr Service revenue 81,000
2. March 13 Collect on accounts receivable, $51,000.
Dr Cash 51,000
Cr Accounts receivable 51,000
3. May 6 Issue shares of common stock in exchange for $10,000 cash.
Dr Cash 10,000
Cr Common stock 10,000
4. June 30 Pay salaries for the current year, $32,600.
Dr Wages expense 32,600
Cr Cash 32,600
5. September 15 Pay utilities of $6,200 from 2020 (prior year).
Dr Utilities payable 6,200
Cr Cash 6,200
6. November 24 Receive cash in advance from customers, $9,200.
Dr Cash 9,200
Cr Unearned revenue 9,2000
7. December 30 Pay $2,600 cash dividends to stockholders.
Dr Dividends 2,600
Cr Cash 2,600
Adjusting entries
Depreciation for the year on the machinery is $7,200.
Dr Depreciation expense 7,200
Cr Accumulated depreciation, equipment 7,200
Plumbing supplies remaining on hand at the end of the year equal $1,000.
Dr Supplies expense 2,500
Cr Supplies 2,500
Of the $9,200 paid in advance by customers, $6,600 of the work has been completed by the end of the year.
Dr Unearned revenue 6,600
Cr Service revenue 6,600
Accrued utilities at year-end amounted to $6,400.
Dr Utilities expense 6,400
Cr Utilities payable 6,400
Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and distribution industry. ($ in millions, except per share amounts.)
Balance Sheets
Metropolitan Republic
Assets $ 179.3 $ 37.1
Cash
Accounts receivable (net) 422.7 325.0
Short-term investments — 4.7
Inventories 466.4 635.2
Prepaid expenses and other current assets134.6 476.7
Current assets $ 1,203.0 1,478.7
Property, plant, and equipment (net) 2,608.2 2,064.6
Intangibles and other assets 210.3 464.7
Total assets $ 4,021.5 $4,008.0
Liabilities and Shareholders’ Equity
Accounts payable $ 467.9 691.2
Short-term notes 227.1 557.4
Accruals and other current liabilities 585.2 538.5
Current liabilities $ 1,280.2 1,787.1
Long-term debt 535.6 542.3
Deferred tax liability 384.6 610.7
Other long-term liabilities 104.0 95.1
Total liabilities $ 2,304.4 3,035.2
Common stock (par and additional paid-in capital)
144.9 335.0
Retained earnings 2,476.9 1,601.9
Less: treasury stock (904.7) (964.1)
Total liabilities and shareholders’ equity $
4,021.5 4,008.0
Income Statements
Net sales 5,698.0 7,768.2
Cost of goods sold (2,909.0) (4,481.7)
Gross profit $ 2,789.0 3,286.5
Operating expenses (1,743.7 ) (2,539.2)
Interest expense (56.8) (46.6)
Income before taxes $ 988.5 700.7
Tax expense (394.7) (276.1)
Net income 593.8 424.6
Net income per share $ 2.40 6.50
Note: Because comparative statements are not provided you should use year-end balances in place of average balances as appropriate.
Required:
Calculate the rate of return on assets for the following companies
Calculate the return on assets for both companies.
Calculate the Rate of return on shareholders’ equity for the following companies
Calculate the equity multiplier for the following companies.
Calculate the acid-test ratio and current ratio for the following companies.
Calculate the receivables and inventory turnover ratios the following companies.
Calculate the times interest earned ratio for the following companies.
Answer and Explanation:
We refer to balance sheet figures for each company stated above to retrieve figures for our calculations and use the following formulas for calculations:
For return on assets= net imcome/total assets
For rate of return on shareholders equity =net income/equity
For equity multiplier= total assets/ total equity
For acid-test ratio=liquid assets/current liabilities
For current ratio =current assets/current liabilities
For receivables = credit sales /acct receivables and inventory turnover ratios=cost of goods/inventory
For times interest earned ratio=ebit/interest expenses
Del Gato Clinic's cash account shows a $11,589 debit balance and its bank statement shows $10,555 on deposit at the close of business on June 30. Outstanding checks as of June 30 total $1,829. The June 30 bank statement lists a $16 bank service charge. Check No. 919, listed with the canceled checks, was correctly drawn for $467 in payment of a utility bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utilities Expense and a credit to Cash in the amount of $476. The June 30 cash receipts of $2,856 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement.
Prepare its bank reconciliation using the above information.
DEL GATO CLINIC
Bank Reconciliation
June 30
Book balance
Add: Bank statement balance
Add:
Deduct: Deduct:
Adjusted bank balance Adjusted book balance
Answer:
Bank Reconciliation
Bank Statement Balance 10,555
Add: June 30 Deposit 2,856
13,411
Less: Outstanding Checks (1,829)
Adjusted bank balance $11,582
Bank Reconciliation
Book Balance 11,589
Add: Error in Check 919 (479 - 467) 9
11,598
Less: Bank service charge ( 16)
Adjusted book balance 11,582
A medical supplies salesperson walks into a hospital administrator's office. The administrator invites the salesperson to sit in a chair directly across the desk from her. Into which space zone is the salesperson being placed
Answer:
Social.
Explanation:
Here the said person is been directed by the administrator to the social wing/angle within the hospital building amongst where the said person can sit and wait to be attended to by a physician, doctor or psychologist.
In the maximum amount as they're seen to be always at the desk ahead of hospitals,
administration isn't just totally their job ad they also bring their education and skill with medical terminology, customer service, and healthcare services to the table furthermore.
This job type can perform a spread of functions and add various roles. Their job title may be anything from a medical office assistant to a patient coordinator or admissions coordinator
Julie Brown is a single woman in her late 20s. She is renting an apartment in the fashionable part of town for $1,000 a month. After much thought, she's seriously considering buying a condominium for $175,000. She intends to put 20 percent down and expects that closing costs will amount to another $5,000; a commercial bank has agreed to lend her money at the fixed rate of 6 percent on a 15-year mortgage. Julie would have to pay an annual condominium owner's insurance premium of $560 and property taxes of $1,000 a year (she's now paying renter's insurance of $550 per year). In addition, she estimates that annual maintenance expenses will be about 0.5 percent of the price of the condo (which includes a $30 monthly fee to the property owners' association). Julie's income puts her in the 25 percent tax bracket (she itemizes her deductions on her tax returns), and she earns an after-tax rate of return on her investments of around 4 percent.
Required:
a. Evaluate and compare Julie’s alternatives of remaining in the apartment or purchasing the condo.
b. Working with a friend who is a realtor, Julie has learned that condos like the one that she’s thinking of buying are appreciating in value at the rate of 3.5 percent a year and are expected to continue doing so. Would such information affect the rent-or-buy decision made in a?
c. Discuss any other factors that should be considered when making a rent-or-buy decision.
d. Which alternative would you recommend for Julie in light of your analysis?
Answer:
a. Julie should continue live in her own apartment.
b. She should then purchase the condo
c. Home maintenance cost and tax benefit.
d. She should live in her own apartment and rent the condo after purchase.
Explanation:
Buying cost of condo $175,000
Loan interest amount $8,400 [ $175,000 * 80% * 6%]
Insurance premium $10 [560 - 550]
Property taxes $1,000
Maintenance expense $875 [$175,000 * 0.5%]
Total additional cost per year $10,280
If Julie plans to buy the condo she will have to incur additional cost of $10,280 per annum.
b. If the price of condo increases by 3.5% per year then she should consider buying the condo.
Amanda is a twenty-four year old student. For two years Amanda has been going to gym and using weight equipment, stationary bicycles, and step machines to improve muscle tone. One spring afternoon Amanda was using a weight machines in the usual way (and the way she was showed how to use it), when the machine malfunctioned causing her serious injury. The company that made the machine, Musclematic, has known for the past year that this problem existed, but the company took no steps to warn people who owned or used these machines of the problem.
If Amanda files a lawsuit against Musclematic, the company might want to seriously consider:
a. How this litigation will affect its goodwill
b. Whether or not a settlement with Amanda is a viable option
c. Whether this suit will adversely affect other business relationships
d. The costs associated with litigating this claim
e. All of the other choices
Answer:
e. All of the other choices
Explanation:
Product liability is the responsibility that a company bears for injury caused by its products as a result of a defect.
In this instance Musclematic, has known for the past year that this problem existed, but the company took no steps to warn people who owned or used these machines of the problem.
So for any injury users have they will be liable.
If Amanda files a lawsuit against Musclematic they will have to consider:
- How this litigation will affect its goodwill
- Whether or not a settlement with Amanda is a viable option
- Whether this suit will adversely affect other business relationships
- The costs associated with litigating this claim
This is because they will most likely lose the case.
( Help please suck on this question !! )
Which of the following challenges will banks continue to tackle over the next few years?
A. Customer engagement
B. Increasing competitive advantage
C. Increasing service offerings
D. Lowering interest rates
Answer:A
Explanation:
Because as long as a bank does have customers over the next few years then they have to tackle customers engagement.
On January 20, 2017, Tamira Nelson, the accountant for Picton Enterprises, is feeling pressure to complete the annual financial statements. The company president has said he needs up-to-date financial statements to share with the bank on January 21 at a dinner meeting that has been called to discuss Picton's obtaining loan financing for a special building project. Tamira knows that she will not be able to gather all the needed information in the next 24 hours to prepare the entire set of adjusting entries. Those entries must be posted before the financial statements accurately portray the company's performance and financial position for the fiscal period ended December 31, 2016. Tamira ultimately decides to estimate several expense accruals at the last minute. When deciding on estimates for the expenses, she uses low estimates because she does not want to make the financial statements look worse than they are. Tamira finishes the financial statements before the deadline and gives them to the president without mentioning that several account balances are estimates that she provided.
Required:
1. Identify several courses of action that Tamira could have taken instead of the one she took.
2. If you were in Tamira's situation, what would you have done?
Answer:
this case tells us about some sort of pressures that accounts feel when financial statements are needed urgently
Explanation:
1) As for using low estimates, this step was wrong on her part. she should have been upfront in her estimates. for the items that she could not estimate there should have been an indication that such items were still under review, instead of doing what she did to give the financial estimate a good look. Using guesses or deliberately using low estimates was a bad idea, GAAP would never condone that.
She should have met with the president and let him know that finalization of the financial statements would not possible within the time frame that he has given. She could have also explain that such delays are normal and she would have given estimates of when the draft internal copy would be made available to him. such steps she took could have resulted in serious consequences for the company
2) I would not inflate or deflate the figures on purpose to make financial statements look better. If it is time to present the draft and final year-end financial statements I will have to tell the truth on the numbers and estimations used and also the reasons for that. i would have explained the constraints that i was facing. if i was still being pressurized by the president, i would have no choice than to call it quits instead of going against the ethics of my profession, since there are both ethical and legal implications to not giving inaccurate financial statements.
Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,031,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows.
Per Undergarment Total
Direct materials $2.04 $2,103,240
Direct labor 0.40 412,400
Variable manufacturing overhead 1.04 1,072,240
Fixed manufacturing overhead 1.44 1,484,640
Variable selling expenses 0.34 350,540
Totals $5.26 $5,423,060
The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 250,500 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $1.02 per undergarment to cover all other costs and provide a profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order.
Required:
Prepare an incremental analysis for the Klean Fiber.
Answer:
Klean Fiber Company
Incremental Analysis for the Special order of 250,500 units of Y-Go undergarments:
Direct materials $2.04 $511,020
Direct labor 0.40 100,200
Variable manufacturing overhead 1.04 260,520
Fixed manufacturing overhead 1.02 255,510
Total costs $4.50 $1,127,250
Fixed manufacturing overhead 1.02 255,510
Incremental costs $3.48 $871,740
Explanation:
a) Data:
Full Capacity = 1,031,000
The per unit and the total costs at full capacity for Y-Go:
Per Undergarment Total
Direct materials $2.04 $2,103,240
Direct labor 0.40 412,400
Variable manufacturing overhead 1.04 1,072,240
Fixed manufacturing overhead 1.44 1,484,640
Variable selling expenses 0.34 350,540
Totals $5.26 $5,423,060
b: In her decision to accept or reject the special order for 250,500 units of Y-Go undergarments by the U.S. Army, the Klean Fiber Company will only consider the relevant incremental unit cost of $3.48 and not the whole unit cost of $5.26. The $3.48 cost excludes the fixed overheads or the selling and administrative expenses.