Answer:
The answer happens to be:
e. II and IV only
II. Tom’s annual HPR will be lower than 6% due to a capital loss from selling the bond at year 3
IV. Tom’s annual HPR will be lower than 6% because gains from the 10% reinvestment rate will be largely offset by the capital loss from selling the bond at year 3
Explanation:
The following events pertain to James Cleaning Company:
1. Acquired $15,000 cash from the issue of common stock.
2. Provided services for $6,000 cash.
3. Provided $18,000 of services on account.
4. Collected $11,000 cash from the account receivable created in Event 3.
5. Paid $1,400 cash to purchase supplies.
6. Had $100 of supplies on hand at the end of the accounting period.
7. Received $3,600 cash in advance for services to be performed in the future.
8. Performed one-half of the services agreed to in Event 7.
9. Paid $6,500 for salaries expense.
10. Incurred $2,800 of other operating expenses on account.
11. Paid $2,100 cash on the account payable created in Event 10.
12. Paid a $1,000 cash dividend to the stockholders.
Required:Show the effects of the events on the financial statements using a horizontal statements model like the following one. In the Cash Flows column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA to indicate accounts not affected by the event. The first event is recorded as an example. (Enter any decreases to account balances and cash outflows with a minus sign
Answer:
I used an excel since there is not enough room here.
Explanation:
Kim is trying to decide whether she can afford a loan she needs in order to go to chiropractic school. Right now Kim is living at home and works in a shoe store, earning a gross income of $1,760 per month. Her employer deducts $199 for taxes from her monthly pay. Kim also pays $189 on several credit card debts each month. The loan she needs for chiropractic school will cost an additional $172 per month. Help Kim make her decision by calculating her debt payments-to-income ratio with and without the college loan.
Required:
a. Carl’s house payment is $1,640 per month and his car payment is $482 per month. If Carl's take-home pay is $3,250 per month, what percentage does Carl spend on his home and car?
b. Suppose that your monthly net income is $2,850. Your monthly debt payments include your student loan payment and a gas credit card. They total $1,140. What is your debt payments-to-income ratio?
Answer:
1. Kim:
Debt payments-to-income ratio with the college loan
= 23%
2. Carl:
Percentage spent on home and car
= 65.3%
3. Debt payment to income ratio
= 40%
Explanation:
Kim's Data and Calculations:
Gross income = $1,760
Income taxes -199
After Tax Income $1,561 per month
Credit card debts = $189 per month
School loan = $172 per month
Total Debt payments = $361
Debt payments-to-income ratio with the college loan
= $361/$1,561 = 23%
Carl:
House payment = $1,640
Car payment = $482
Total payments = $2,122
Take-home pay = $3,250
Percentage spent on home and car = 65.3% ($2,122/$3,250 * 100)
3. My monthly net income = $2,850
Monthly debt payments = $1,140
Debt payment to income ratio
= $1,140/$2,850 * 100
= 0.4
= 40%
Maisie Taft started her own consulting firm, Maisie Consulting, on May 1, 2020. The following transactions occurred during the month of May.
May 1 Maisie invested $7,000 cash in the business.
2 Paid $900 for office rent for the month.
3 Purchased $800 of supplies on account.
5 Paid $125 to advertise in the County News.
9 Received $4,000 cash for services performed.
12 Withdrew $1,000 cash for personal use.
15 Performed $6,400 of services on account.
17 Paid $2,500 for employee salaries.
20 Made a partial payment of $600 for the supplies purchased on account on May 3.
23 Received a cash payment of $4,000 for services performed on account on May 15.
26 Borrowed $5,000 from the bank on a note payable.
29 Purchased equipment for $4,200 on account.
30 Paid $275 for utilities.
Questions:
A. Prepare an income statement for the month of May.
B. Prepare a balance sheet at May 31, 2020.
Answer:
A. NET INCOME $6,600
B. TOTAL ASSETS $22,000
TOTAL LIABILITIES AND EQUITY $22,000
Explanation:
A. Preparation of income statement for the month of May.
Maisie Taft INCOME STATEMENT for May 2020
Service Revenue $10,400
($4,000 + $6,400)
Less: Expenses
Rent expense ($900)
Advertising expense ($125)
Salaries expense ($2,500)
Utilities expense ($275)
NET INCOME $6,600
Therefore the Net income on the income statement for the month of May 2020 will be $6,600
B. Preparation of balance sheet at May 31, 2020
Maisie Taft BALANCE SHEET at May 31, 2020
ASSETS:
Cash $14,600
Accounts receivable $2,400
Supplies $800
Equipment $4,200
TOTAL ASSETS $22,000
(14,600+2,400+800+4,200)
LIABILITIES:
Accounts payable $4,400
Notes payable $5,000
Total liabilities $9,400
($4,400+$5,000)
EQUITY:
Owner's equity $7,000
Retained earnings $5,600
($6,600 - $1,000)
Total equity $12,600
($7,000+$5,600)
TOTAL LIABILITIES AND EQUITY $22,000
($9,400 + $12,600)
CASH
May 1 Cash $7,000
2 Paid Office rent ($900)
5 Paid to advertise ($125)
9 Cash Received $4,000
12 Cash Withdrew ($1,000)
17 Paid employee salaries ($2,500)
20 Supplies purchased ($600)
23 Cash payment $4,000
26 Note payable $5,000
30 Utilities ($275)
CASH $14,600
ACCOUNT RECEIVABLES
May 15 $6,400
May 23 ($4,000)
ACCOUNT RECEIVABLES $2,400
ACCOUNT PAYABLE
May 3 $800
May 20 ($600)
May 29 $4,200
ACCOUNT PAYABLE $4,400
Therefore the Total asset on the balance sheet at May 31, 2020 will be $22,000 and the Total liabilities and equity on the balance sheet at May 31, 2020 will be $22,000
Use the information about Billy's Burgers to answer the following question(s):
Billy's Burgers
Figures in $ millions
Income Statement 2010 Balance Sheet 2010
Net Sales 246.0 Assets
Costs exc. Dep. 187.0 Cash 8.0
EBITDA 59.0 Accts. Rec. 21.0
Depreciation 17.2 Inventories 23.0
EBIT 41.8 Total Current Assets 52.0
Interest 12.0 Net PP&E 145.0
Pretax Income 29.8 Total Assets 197.0
Taxes 10.4
Net Income 19.4 Liabilities and Equity Accts.
Payable 18.0 LongTerm Debt 82.0
Total Liabilities 100.0 Total Stockholders' Equity 97.0
Total Liabilities and Equity 197.0
Required:
Using the percent of sales method, and assuming 20% growth in sales, estimate Billy's Burgers' Accounts Receivable for 2011.
a. $21.0 million
b. $18.0 million
c. $25.2 million
d. $21.6 million
Answer:
c. $25.2 million
Explanation:
Billy's Burgers' Accounts receivable 2011 = Accounts receivable 2010 *(1+Growth rate)
Billy's Burgers' Accounts receivable 2011 = $21,000,000 * (1+0.20)
Billy's Burgers' Accounts receivable 2011 = $21,000,000 * (1.20)
Billy's Burgers' Accounts receivable 2011 = $25,200,000.
Tawna Reed was hired for a top managerial position in Nike Corporation because she had creative ability and a good overall feel for the athletic shoe industry. Reed is said to have good _____ skills.
Answer:
C) conceptual.
Explanation:
Conceptual skills are essential in managers of large companies, such as that of the multinational Nike.
This ability means that the manager has a vision of the organization as an integrated system, where each part has its relevance in the organizational whole and must be considered in the processing, evaluation and planning of the strategies that will lead to organizational success.
Having conceptual skills means having the skills to have a diffuse and analytical thinking of the organization and all the parts that involve it, which makes the entire management decision-making process much more efficient and aligned with the organization's objectives and goals.
Comfort chair company manufacturers a standard recliner. During February, the firm's Assembly Department started production of 73,000 chairs. During the month, the firm completed 78,000 chairs, and transferred them to the Finishing Department. The firm ended the month with 10,000 chairs in ending inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is used by Comfort. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 80% complete as to conversion costs.
Beginning inventory:
DIrect materials $24,000
Conversion costs $35,000
Manufacturing costs added during the accounting period:
Direct materials $168,000
Conversion costs $278,000
1. What were the equivalent units for conversion costs during February? (HINT: The answer is 81,500, but I need work to support this)
2. What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of February? (HINT: The answer is $23,000, but I need work to support this)
Answer:
1) total equivalent units:
materials = 73,000
conversion = 81,500
2) costs assigned to ending WIP:
materials = $23,013.70
conversion = $27,288.32
Explanation:
beginning WIP 78,000 + 10,000 - 73,000 = 15,000
materials = 100% (0 added during the period)
conversion = 30% (70% added during the period, 10,500 EU)
units started 73,000
units finished 78,000
units started and finished = 63,000
ending WIP 10,000
materials = 100%
conversion = 80%, 8,000 EU
Beginning WIP
Materials $24,000
Conversion $35,000
Costs added during the period:
Materials $168,000
Conversion $278,000
total equivalent units:
materials = 73,000
conversion = 10,500 + 63,000 + 8,000 = 81,500
cost per EU:
Materials = $168,000 / 73,000 = $2.30137
Conversion = $278,000 / 81,500 = $3.41104
costs assigned to ending WIP:
materials = 10,000 x $2.30137 = $23,013.70
conversion = 8,000 x $3.41104 = $27,288.32
What are two cons of using a credit card?
The revenues budget identifies: a. expected cash flows for each product b. actual sales from last year for each product c. the expected level of sales for the company d. the variance of sales from actual for each product
Answer:
c. the expected level of sales for the company
Explanation:
Revenue/Sales Budget is the first budget to be prepared by most companies because most businesses are sales led.
This Budget shows, the expected level of sales for the company.
BensonBenson & Company is an architectural firm specializing in home remodeling for private clients and new office buildings for corporate clients. charges customers at a billing rate equal to % of the client's total job cost. A client's total job cost is a combination of (1) professional time spent on the client ( per hour cost of employing each professional) and (2) operating overhead allocated to the client's job. allocates operating overhead to jobs based on professional hours spent on the job. estimates its five professionals will incur a total of 10,000 professional hours working on client jobs during the year.
AllissaAllissa LarsonLarson hired BensonBenson to design her kitchen remodeling. A total of 35 professional hours were incurred on this job. In addition, LarsonLarson's remodeling job required one of the professionals to travel back and forth to her house for a total of 155 miles. The blueprints had to be copied four times because LarsonLarson changed the plans several times. In addition, 14 hours of secretarial time were used lining up the subcontractors for the job.
All operating costs other than professional salaries (travel reimbursements, copy costs, secretarial salaries, office lease, and soforth) can be assigned to the three activities. Total activity costs, cost drivers, and total usage of those cost drivers are estimated as follows:
Activity Total Activity Cost Cost Driver Usage Total Usage by Corporate Clients Total usage by Private Clients
Transporation to clients. . . . . . $9,000 Round-trip mileage to clients. . . . . 1,500 miles 13,500 miles
Blueprint copying. . . . . . . . . . . 35,000 Number of copies. . . . . . . . . . . . 250 copies 750 copies
Office support. . . . . . . . . . . . . . 190,000 Secretarial time. . . . . . . . . . . . . . . 2,600 secretarial 2,400 secretarial
hours hours
Total operating overhead. . . . $234,000
Required:
a. Calculate the current indirect cost allocation rate per professional hour.
b. Calculate the total amount that would be billed to LarsonLarson given the current costing structure.
c. Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs.
d. Calculate the amount that would be billed to LarsonLarson using ABC costing.
e. Which type of billing system is more fair to clients? Explain.
Answer:
Benson & Company
a. Current indirect cost allocation rate per professional hour = Total overhead divided by 10,000 professional hours
$234,000/10,000
= $23.40
b. Total amount that would be billed to Larson with the current costing structure:
= $23.40 * 35
= $819.00
c. Overhead Rates based on ABC:
Transport to clients = $0.60 ($9,000/15,000)
Blueprint copying = $35.00 ($35,000/1,000)
Office support = $38.00 ($190,000/5,000)
d. Larson's Job based on ABC:
Transport to clients = $93 ($0.60 * 155)
Blueprint copying = 140 ($35.00 * 4)
Office support = 532 ($38.00 * 14)
Total $765
e. With Benson Company using ABC billing system to charge Larson, the system is fairer to clients generally, because it takes into consideration the volume of each activity consumed per client. Customers are charged based on actual activities consumed, and not based on some arbitrary figures. It is more reflective of the cost structure of the business and offers the best quality service to customers because price is determined by volume of activities.
Explanation:
a) Data and Calculations:
Professional hours spent on Larson job = 35 hours
Travel = 155 miles
Blueprints copies = 4
Secretarial time = 14 hours
Other operating costs:
Activity Total Activity Cost Driver Total Usage by Total Usage by
Cost Usage Corporate Clients Private Clients
Transportation Round-trip mileage
to clients $9,000 to clients 1,500 miles 13,500 miles
Blueprint
copying 35,000 Number of copies 250 copies 750 copies
Office support 190,000 Secretarial time 2,600 secretarial 2,400 secretarial hours hours
Total operating overhead $234,000
Estimated professional hours = 10,000
Overhead Rate = $23.40
Larson's Job:
Overhead cost = $23.40 * 35 = $819.00
Overhead Rates based on ABC: Larson's Job
Transport to clients = $0.60 $93 ($0.60 * 155)
Blueprint copying = $35.00 140 ($35.00 * 4)
Office support = $38.00 532 ($38.00 * 14)
Total $765
The following is a partial trial balance for the Green Star Corporation as of December 31, 2021:
Account Title Debits Credits
Sales revenue 1,400,000
Interest revenue 35,000
Gain on sale of investments 55,000
Cost of goods sold 740,000
Selling expenses 185,000
General and administrative expenses 80,000
Interest expense 45,000
Income tax expense 135,000
There were 100,000 shares of common stock outstanding throughout 2021.
Required:
Prepare a single-step income statement for 2021, including EPS disclosures.
Prepare a multiple-step income statement for 2021, including EPS disclosures.
Answer:
1. Single-Step Income
Income statement
Revenues and gains: Amount$
Sales revenue 1,400,000
Interest revenue 35,000
Gain on sale of investment 55,000
Total revenues and gains 1,490,000
Expenses and losses
Cost of goods sold 740,000
General and administrative 80,000
expenses
Selling expenses 185,000
Interest expense 45,000
Total expenses and losses 1,050,000
Income before income tax 440,000
Income tax expense -135,000
Net income 305,000
EPS = Net income/Number of common shares
EPS = 305,000/100,000
EPS = 3.05
2. Multi-Step Income
Income statement
Particulars Amount$
Sales 1,400,000
Cost of goods sold -740,000
Gross profit 660,000
Operating expenses
General and administrative 80,000
expenses
Selling expenses 185,000
Total operating expenses -265,000
Operating income 395,000
Other incomes and expenses
Interest revenue 35,000
Gain on sale of investment 55,000
Interest expense -45,000
Total other income, net 45,000
Income before income tax 440,000
Income tax expense -135,000
Net income $305,000
EPS = Net income/Number of common shares
EPS = 305,000/100,000
EPS = 3.05
Prepare a bank reconciliation as of October 31 from the following information:
a. The October 31 cash balance in the general ledger is $806.
b. The October 31 balance shown on the bank statement is $350.
c. Checks issued but not returned with the bank statement were No. 462 for $24 and No. 483 for $42.
d. A deposit made late on October 31 for $433 is included in the general ledger balance but not in the bank statement balance.
e. Returned with the bank statement was a notice that a customer's check for $80 that was deposited on October 25 had been returned because the customer's account was overdrawn.
f. During a review of the checks that were returned with the bank statement, it was noted that the amount of Check No. 471 was $65 but that in the company's records supporting the general ledger balance, the check had been erroneously recorded as a payment of an account payable in the amount of $56.
Answer:
Bank Reconciliation Statement as of October 31
Particulars Amount Particulars Amount
Balance as per bank $350 Balance as per books $806
Add: Late deposit $433 Less: Returned checks $80
Less: Outstanding check $66 Less: Error recordings $9
($24+$42) ($65-$56)
Reconciled Balance $717 Reconciled Balance $717
how can you use information about a person's values to help you relate more effectively to him or her."
Answer: bec if you know the person’s values your are able to better communicate with them because you know their likes and dislikes you have had the chance and opportunity to get to know them and that can help you achieve your goal.
Explanation:
If you know the person’s values you are able to better communicate with them because you know their likes and dislikes you have had the chance and opportunity to get to know them and that can help you achieve your goal.
what is the quality definition of Verbal exchange?
1a: a system by way of which facts are exchanged between people thru a common device of symbols, signs, and symptoms, or behavior the function of pheromones in insect verbal exchange also: alternate of data. b: private rapport is a loss of communication between old and young people.
Why is verbal exchange crucial?Top verbal exchange abilities are vital to allow others and yourself to understand facts extra correctly and fast. In contrast, terrible conversation abilities cause frequent misunderstandings and frustration.
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Darby Company, operating at full capacity, sold 500,000 units at a price of $94 per unit during the current year. Its income statement is as follows:
Sales $47,000,000
Cost of goods sold 25,000,000
Gross profit $22,000,000
Expenses:
Selling expenses $4,000,000
Administrative expenses 3,000,000
Total expenses 7,000,000
Income from operations $15,000,000
The division of costs between variable and fixed is as follows:
Variable Fixed
Cost of goods sold 70% 30%
Selling expenses 75% 25%
Administrative expenses50% 50%
Management is considering a plant expansion program for the following year that will permit an increase of $3,760,000 in yearly sales. The expansion will increase fixed costs by $1,800,000 but will not affect the relationship between sales and variable costs.
Required:
1. Determine the total variable costs and the total fixed costs for the current year.
Total variable costs $_____
Total fixed costs $_____
2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost $_____
Unit contribution margin $_____
3. Compute the break-even sales (units) for the current year.
4. Compute the break-even sales (units) under the proposed program for the following year.
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $15,000,000 of income from operations that were earned in the current year.
6. Determine the maximum income from operations possible with the expanded plant.
7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?
8. Based on the data given, would you recommend accepting the proposal?
a. In favor of the proposal because of the reduction in break-even point.
b. In favor of the proposal because of the possibility of increasing income from operations.
c. In favor of the proposal because of the increase in break-even point.
d. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
e. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.
Answer:
Darby Company
1. Determination of the total variable costs and the total fixed costs for the current year.
Total variable costs $_____22,000,000
Total fixed costs $_____10,000,000
2. Determination of (a) the unit variable cost and (b) the unit contribution margin for the current year.
Unit variable cost $_____44 ($22,000,000/500,000)
Unit contribution margin $_____50 ($94 - $44)
3. Compute the break-even sales (units) for the current year:
Break-even sales (units) = Fixed Costs/Contribution per unit
= $10,000,000/$50 = 200,000 units
4. Compute the break-even sales (units) under the proposed program for the following year.
Break-even sales (units) = Fixed costs/Contribution per unit
= $11,800,000/$50 = 236,000
5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $15,000,000 of income from operations that were earned in the current year
Break-even sales (units) to achieve income target = (Fixed costs + Income target)/Contribution per unit
= ($11,800,000 + 15,000,000)/$50
= 536,000
6. Determine the maximum income from operations possible with the expanded plant.
Income Statement for the current year
Next Year's Financials:
Total
Sales $50,760,000 ($94 * 540,000)
Expenses:
Total variable 23,760,000 ($44 * 540,000)
Fixed costs 11,800,000 ($10,000,000 + $1,800,000)
Income from operations $15,200,000
7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?
Total
Sales $47,000,000 ($94 * 500,000)
Expenses:
Total variable 22,000,000 ($44 * 500,000)
Fixed costs 11,800,000 ($10,000,000 + $1,800,000)
Income from operations $13,200,000
8. Based on the data given, would you recommend accepting the proposal?
Unless the proposal results to an increase in the units sold, it is not acceptable as can be seen from (7) above. However, it is very acceptable if sales unit will increase by 40,000 units as illustrated in (6) above.
b. In favor of the proposal because of the possibility of increasing income from operations.
Explanation:
a) Data and Calculations:
Income Statement for the current year
Sales $47,000,000
Cost of goods sold 25,000,000
Gross profit $22,000,000
Expenses:
Selling expenses $4,000,000
Administrative expenses 3,000,000
Total expenses 7,000,000
Income from operations $15,000,000
Sales volume = 500,000 units
Selling price = $94
Division of costs between variable and fixed is as follows:
Variable Fixed Variable Fixed Total
Sales $47,000,000
Cost of goods sold 70% 30% $17,500,00 7,500,000 25,000,000
Gross profit $22,000,000
Expenses:
Selling expenses 75% 25% 3,000,000 1,000,000 4,000,000
Administrative exp. 50% 50% 1,500,000 1,500,000 3,000,000
Total expenses 4,500,000 2,500,000 7,000,000
Total variable and fixed costs 22,000,000 10,000,000 32,000,000
Income from operations $15,000,000
Next Year's Financials:
Variable Fixed Variable Fixed Total
Sales $50,760,000
Cost of goods sold 70% 30% $17,500,00 7,500,000 25,000,000
Gross profit $22,000,000
Expenses:
Total variable and fixed costs 22,000,000 11,800,000
Income from operations $15,000,000
Connors Bros., a Maritime seafood products manufacturer, hopes to attract Ontario consumers for its Brunswick sardines through a campaign pushing the small fish as a positive food choice. In the campaign, Conner encouraged consumers to buy more sardines. If consumers purchased more sardines, then supermarkets would stock more sardines, thus creating _____ for the small fish.
Answer:
Derived demand
Explanation:
Derived demand is defined as the demand for a product that occurs as a result of demand for another or similar product. For example the demand for factors of production can result from increased fans for a party product.
In the given scenario the campaign by Connors Bros. a Maritime seafood products manufacturer, hopes to attract Ontario consumers for its Brunswick sardines.
When there is increase in demand for sardines, supermarkets will stock up more sardines. Thereby increasing the demand for sardines.
The sardine demand by supermarkets is derived from the consumer demand for them.
Connors Bros. is trying to create a derived demand for the small fish business enterprise.
Derived demand is defined as the need for a unit of production or intermediate good that arises as a response to demand for another intermediate or final item is referred to as
From the information given, the demand for a unit of production by a business enterprise is determined by customer demand for the firm's product.
If the consumers of Brunswick sardines purchase more sardines, supermarkets that get these products from Connors Bros. will definitely stock more sardines.
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Read the following sentences, and identify the error.
a. Paolo recruited job applicants for the company that showed promise.
The error in this sentence is a:_________ .
b. We will be visiting our accounts in California, Oregon, and visiting our accounts in Washington.
The error in this sentence is a:________ .
Before you decide whether to use passive or active voice, you should consider the purpose of your message and the nature of the situation. Read the scenario, and then fill in the blanks.
You work for a printing company, and you realize that your colleague sent incorrect price quotes to a client. You begin to write an e-mail to the client to apologize for the mistake. You want to remedy the situation without criticizing your colleague. The sentence excerpted from the e-mail uses ______________ voice. Given the purpose of your message, this voice ___________ appropriate.
Answer:
a. Paolo recruited job applicants for the company that showed promise.
The error in this sentence is a: AMBIGUITY.
Who showed promise? The company or the job applicants? This sentence is not specific and you really cannot tell whether the job applicants or the company showed promise.
b. We will be visiting our accounts in California, Oregon, and visiting our accounts in Washington.
The error in this sentence is a: LACK OF PARALLELISM.
In order to show parallelism you should include the dates of the visits, since you cannot visit all 3 states in the same day and do your work properly.You work for a printing company, and you realize that your colleague sent incorrect price quotes to a client. You begin to write an e-mail to the client to apologize for the mistake. You want to remedy the situation without criticizing your colleague.
The sentence is missing, so I looked for a similar question:
"Bill made an error when he was processing your invoice."
The sentence excerpted from the e-mail uses ACTIVE voice. Given the purpose of your message, this voice IS NOT appropriate.
The whole purpose of this message is to solve a problem without criticizing Bill, but by using active voice, you are directly criticizing him.Alpha Inc. has receivables from unrelated parties with a face value of $5,000. It transfers these receivables to bank for $4,500, without recourse. It will continue to collect the receivables, depositing them in a non-interest-bearing bank account with the cash flows remitted to the bank at the end of each month. It is not allowed to sell or pledge the receivables to anyone else and is under no obligation to repurchase the receivables from bank. Which of the following is the appropriate treatment for these Accounts receivables?
A) It should show these receivables in its Balance Sheet.
B) It should amortize these receivables.
C) It should derecognize these receivables.
D) It should derecognize these receivables if it retains the interest earned on these.
Answer:
C). It should derecognize these receivables.
Explanation:
Derecognition is characterized as the process of removing or derecognizing a financial asset or liability from the company's balance sheet that was previously acknowledged. In the given situation, the appropriate treatment for the Account receivables would be to dercognize it as the organization does not possess any control over them. Thus, option C is the correct answer.
Svetlana won $1,000,000 in a contest, to be paid in twenty $50,000 payments at yearly intervals, the first payment paid at the time of the contest. (Of course, the present value of her winnings is less than $1,000,000.) Svetlana decided to keep X each year to spend and deposit the remaining $50;000 X into an account earning an annual effective interest rate of 5%. She chose the value X to be as large as possible so that, at the moment of the 20th deposit, the account would have grown to such a size that it would provide Svetlana and her heirs at least X per year in interest forever. Find X.
Answer: 31155.5
Explanation:
The following can be deduced from the question:
Money won = $1,000,000
Installments made yearly = $50,000
Interest rate = 5%
The yearly deposits made by Svetalana will be: = 500000-x
The future Value of the yearly deposits made by Svetalana will be:
= (50000-x) × (1/(1.05) + (1/(1.05)^2 .....(1/(1+0.05)^20))
= (500000-x) × 33.066
We should recall that the interest from the question is equated to x. This will be:
33.066 × (50000-x) × 0.05 =x
1.6533(50000 - x) = x
82665 - 1.6533x = x
2.6533x = 82665
x = 82665/2.6533
x = 31155.5
Ballou Corporation declared a cash dividend on December 13, 2018, payable on January 10, 2019. By mistake, the company failed to make a journal entry in December 2018. The effect of this error on the financial statements as of December 31, 2018 were:_____.
a. retained earnings was overstated and liabilities were understated.
b. retained earnings was overstated and cash were understated.
c. retained earnings and liabilities were both understated.
d. retained earnings and liabilities were both overstated.
Answer:
a. retained earnings was overstated and liabilities were understated.
Explanation:
Since in the cash dividend is declared also the same is not recorded by the company
So this error would impact the two account i.e. retained earnings and the liabilities
In this, the retained earning is overstated and the liabilities were understated
Therefore the correct option is a.
And, the rest of the options are wrong
This activity is important because any business that offers multiple product lines to multiple market segments is faced with the task of making the product/market decisions and prioritizing those decisions. Products and market segments that are growing quickly and are very profitable should get more attention and resources than a product and market segment that does not show as much potential.
Once a marketing manager creates a market-product grid, they must select which segments to target. To do this, the marketing manager should use several criteria in assessing the different segments. Those criteria include: market size, expected growth, competitive position, cost of reaching the segment, and the compatibility with the organization's objectives and resources.
The goal of this exercise is to demonstrate your understanding of the market-product development process by analyzing a gift shop's markets and products.
Read the case below and then answer the questions that follow as you consider its markets and product offerings.
A small local gift shop recently marked its 25th anniversary of being in business. Over that time, the owners have continually changed the products sold in its store to reflect changes in the market. From the early days of selling small gift-type items such as figurines and collectibles, the store now offers a more eclectic mix of merchandise that includes Vera Bradley purses and inexpensive jewelry, as well as items that could be classified as "gift-type" products and merchandise that is best described as "collectibles."
However, the demographics of the store's market, as well as the needs of that market, seem to be changing. There has been an influx of younger customers (20s and 30s) into the area, which has brought the average age of the area down by 9.8 years. This rapidly growing segment doesn't seem interested in buying the same collectibles that their parents bought. Many older residents (60s and 70s) have been leaving the area for retirement. The older customers are still buying the collectibles, but are also buying gifts for children and grandchildren for holidays and special occasions. Indeed, while sales of merchandise aimed at the younger customers have grown 30 percent, sales to the older crowd have been flat. And the younger group has now passed the older segment in terms of the size of the population. While there are other stores in the area selling similar merchandise, this gift shop has managed to get an exclusive on the Vera Bradley line, which has been popular with the younger customers. The owners of the gift shop are considering which market segment should be the focus of their attention and limited resources. This is an especially critical decision because of the limited space in the store and the need to add fixtures for carrying some of the collectible items that are coming on the market.
Based on the limited information in the case, which market segment is larger?
a) the over-80 segment
b) all segments are the same size
c) the 60s and 70s segment
d) the 20s and 30s segment
The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2017:
Beginning Ending
Inventories: Raw materials $17,000 $19,000
Work in process 9,000 14,000
Finished goods 11,000 8,000
Total $37,000 $41,000
In addition, the following transactions occurred in 2017:
1. Raw materials purchased on account, $75,000.
2. Incurred factory labor, $80,000, all is direct labor. (Credit Factory Wages Payable).
3. Incurred the following overhead costs during the year: Utilities $6,800, Depreciation on manufacturing machinery $8,000, Manufacturing machinery repairs $9,200, Factory insurance $9,000 (Credit Accounts Payable and Accumulated Depreciation).
4. Assigned $80,000 of factory labor to jobs.
5. Applied $36,000 of overhead to jobs. Instructions
Required:
a. Journalize the above transactions.
b. Reproduce the manufacturing cost and inventory accounts.
c. From an analysis of the accounts, compute the following:
1. Raw materials used.
2. Completed jobs transferred to finished goods.
3. Cost of goods sold.
4. Under- or overapplied overhead.
Answer:
Ricci Manufacturing Corporation
a. Journal Entries;
1. Debit Raw Materials Inventory $75,000
Credit Accounts Payable $75,000
To record the purchase of materials on account.
2. Debit Factory Wages $80,000
Credit Factory Wages Payable $80,000
To record factory labor incurred on account.
3. Debit Manufacturing Overhead:
Utilities $6,800
Depreciation $8,000
Machinery Repairs $9,200
Factory Insurance $9,000
Credit: Accounts Payable $25,000
Accumulated Depreciation $8,000
To record manufacturing overhead costs incurred.
4. Debit Work in Process $80,000
Credit Factory Wages $80,000
To record the assignment of factory labor to jobs.
5. Debit Work in Process $36,000
Credit Manufacturing Overheads $36,000
To apply overhead to jobs.
b. Manufacturing cost and Inventory Accounts:
Raw Materials
Accounts Titles Debit Credit
Balance $17,000
Accounts payable 75,000
Work in Process 73,000
Balance $19,000
Work in Process
Accounts Titles Debit Credit
Balance $9,000
Raw materials 73,000
Factory Wages 80,000
Manuf. Overhead 36,000
Finished Goods $184,000
Balance $14,000
Finished Goods
Accounts Titles Debit Credit
Balance $11,000
Work in Process 184,000
Cost of goods sold $187,000
Balance $8,000
c. Computation of:
1. Raw materials used
= Beginning Inventory + Purchases - Ending Inventory
= $17,000 + $75,000 - $19,000
= $73,000
2. Completed jobs transferred to finished goods
= Beginning WIP + Raw materials used + Labor + Overhead - Ending WIP
= $9,000 + $73,000 + $80,000 + $36,000 - $14,000
= $184,000
3. Cost of goods sold
= Beginning Finished Goods + Manufacturing Costs - Ending Finished Goods
= $11,000 + $184,000 - $8,000
= $197,000
4. Under- or overapplied overhead
= Total Incurred manufacturing overhead - applied manufacturing overhead
= $33,000 - $36,000
= $3,000 over-applied
Explanation:
a) Data:
Beginning Ending
Inventories:
Raw materials $17,000 $19,000
Work in process 9,000 14,000
Finished goods 11,000 8,000
Total $37,000 $41,000
The technique recommended by the text to organize an analysis of external strategic factors is called
Joni Splish Brothers Inc. has the following amounts reported in its general ledger at the end of the current year.
Organization costs $23,800
Trademarks 15,700
Discount on bonds payable 36,800
Deposits with advertising agency for ads to promote goodwill of company 11,800
Excess of cost over fair value of net identifiable assets of acquired subsidiary 76,800
Cost of equipment acquired for research and development projects; the equipment has an alternative future use 86,800
Costs of developing a secret formula for a product that is expected to be marketed for at least 20 years 82,600
Required:
On the basis of this information, compute the total amount to be reported by Hyde for intangible assets on its balance sheet at year-end.
Answer:
$92,500
Explanation:
The computation of the total intangible asset is shown below:
= Trademarks + Excess of cost over fair value of net identifiable assets of acquired subsidiary
= $15,700 + $76,800
= $92,500
Hence, the total intangible asset is $92,500 and the same is to be considered
We simply applied the above formula
Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine, Michael, and Candice). The couple received salary income of $100,000 and qualified business income of $10,000 from an investment in a partnership, and they sold their home this year. They initially purchased the home three years ago for $200,000 and they sold it for $250,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $16,500 of itemized deductions, and they had $3,550 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice is 18 years of age, the Jacksons may only claim the child tax credit for other qualifying dependents for Candice. (Use the tax rate schedules.)
Comprehensive Problem 4-55 Parts-c through f
a. What would their taxable income be if their itemized deductions totaled $28,000 instead of $16,500?
b. What would their taxable income be if they had $0 itemized deductions and $6,000 of for AGI deductions?
c. Assume the original facts but now suppose the Jacksons also incurred a loss of $5,000 on the sale of some of their investment assets. What effect does the $5,000 loss have on their taxable income?
Answer:
a. Taxable income = $80,000
b. Taxable income = $77,600
c. Taxable income = $80,600
Explanation:
Taxable income refers to the amount of income that is used to determine the amount of tax that will be paid to the government by an individual or firm in given year. The taxable income is arrived at after all the relevant addition and allowable deductions have been made.
The requirements are therefore answered as follows:
a. What would their taxable income be if their itemized deductions totaled $28,000 instead of $16,500?
Note: See part a of the attached excel file see the effect on taxable income.
The itemized deductions total of $28,000 instead of $16,500 makes the taxable income to be $80,000.
In the attached excel file, the following calculations is used:
Qualified business income deduction = Qualified business income * Parentage of deduction allowed = $10,000 * 20% = $2,000
b. What would their taxable income be if they had $0 itemized deductions and $6,000 of for AGI deductions?
Note: See part b of the attached excel file for the calculations of the taxable income.
This makes the taxable income to be equal to $77,600.
c. Assume the original facts but now suppose the Jacksons also incurred a loss of $5,000 on the sale of some of their investment assets. What effect does the $5,000 loss have on their taxable income?
Note: See part c of the attached excel file for the calculations of the taxable income.
The loss of loss of $5,000 on the sale of some of their investment assets incurred by the Jacksons is capital loss.
For tax purposes, capital loss of can be deducted as a loss on tax return by tax payers with a maximum of $3,000 to be deducted per year.
Therefore, the Jacksons will deduct $3,000 as a capital loss from their tax return, and the effect of this is to reduce the taxable income by $3,000.
This makes the taxable income to be equal to $80,600.
Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 20-year life when issued and the annual interest payment was then 13 percent. This return was in line with the required returns by bondholders at that point as described below:
Real rate of return 4 %
Inflation premium 5
Risk premium 4
Total return 13 %
Assume that five years later the inflation premium is only 3 percent and is appropriately reflected in the required return (or yield to maturity) of the bonds. The bonds have 15 years remaining until maturity. Use Appendix B and Appendix D.
Answer:
"1143.817" is the appropriate answer.
Explanation:
According to the question:
Risk premium is:
= [tex]4+3+4[/tex]
= [tex]11 \ percent[/tex]
K = N
⇒ Bond Price = [tex]\Sigma [\frac{Coupon}{(1 + YTM)^k} ] + \frac{Per \ value}{(1 + YTM)^N}[/tex]
[tex]k = 1[/tex]
K = 15
On putting the values, we get
⇒ Bond Price = [tex]\Sigma [\frac{13\times \frac{1000}{100} }{(1 + \frac{11}{100})^k} ] + \frac{1000}{(1 + \frac{11}{100} )^{15}}[/tex]
= [tex]1143.817[/tex]
A stock has an average expected return of 10.8 percent for the next year. The beta of the stock is 1.22. The T-Bill rate is 5% and the T-Bond rate is 3.4 %. What is the market risk premium
Answer: 4.7%
Explanation:
Expected return is calculated as:
= Risk free return + Beta ( Market risk premium)
10.8% = 5% + (1.22 × Market risk premium)
10.8% - 5% = 1.22market risk premium
5.8%/1.22 = market risk premium
Market risk premium = 0.058/1.22
Market risk premium = 0.047
Market risk premium = 4.7%
Bristo Corporation has sales of 1,750 units at $40 per unit. Variable expenses are 30% of the selling price. If total fixed expenses are $39,000, the degree of operating leverage is:
Answer:
1,750=$40=1,750×40=70-30÷100×39,000=58,3
Explanation:
is total cost of production can be fixed cost +variable cost
Answer:
degree of operating leverage= 4.9
Explanation:
To calculate the degree of operating leverage, we need to use the following formula:
degree of operating leverage= Total contribution margin / operating income
Total Contribution margin= 1,750*(40*0.7)= $49,000
Operating income= 49,000 - 39,000= $10,000
degree of operating leverage= 49,000/10,000
degree of operating leverage= 4.9
When all of a firm's inputs are doubled, input prices do not change, and this results in the firm's level of production more than doubling, a firm is operating:
Answer: (B) on the downward-sloping portion of its long-run average total cost curve.
Explanation:
The downward-sloping portion of a company's Long Run Average Total Cost(LRATC) curve is the part where increasing returns to scale is witnessed.
This is because the costs that are incurred by the company leads to higher proportional output thereby reducing the average cost and pulling the LRATC down.
In this scenario, the inputs doubled and the firm's level of production more than doubled which means that with outputs increasing more than costs, the Average cost is reducing and the slope is downward sloping.
Leonard, a company that manufactures explosionproof motors, is considering two alternatives for expanding its international export capacity. Option 1 requires equipment purchases of $900,000 now and $560,000 two years from now, with annual M&O costs of $79,000 in years 1 through 10. Option 2 involves subcontracting some of the production at costs of $280,000 per year beginning now through the end of year 10. Neither option will have a significant salvage value.
Required:
Use a present worth analysis to determine which option is more attractive at the company’s MARR of 20% per year. (Note: Check out the spreadsheet exercises for new options that Leonard has been offered recently.)
Answer:
Since the total present value of Option 2 of – $1,453,892 is lower than the total present value of Option 1 of – $1,620,094, it implies that Option 2 costs less and more attractive at the company’s MARR of 20% per year than Option 1. Therefore, Option 2 should be selected.
Explanation:
Note: See the attached excel file for the calculation of the total present values (in bold red color) of the two alternatives for expanding international export capacity.
Present worth can be described as an equivalence method of analysis in which the cash flows of an investment or a project are discounted to a single present value.
From the attached excel file, we have:
Total present value of Option 1 = – $1,620,094
Total present value of Option 2 = – $1,453,892
Since the total present value of Option 2 of – $1,453,892 is lower than the total present value of Option 1 of – $1,620,094, it implies that Option 2 costs less and more attractive at the company’s MARR of 20% per year than Option 1. Therefore, Option 2 should be selected.
Midland Petroleum is holding a stockholders’ meeting next month. Ms. Ramsey is the president of the company and has the support of the existing board of directors. All 12 members of the board are up for reelection. Mr. Clark is a dissident stockholder. He controls proxies for 42,001 shares. Ms. Ramsey and her friends on the board control 52,001 shares. Other stockholders, whose loyalties are unknown, will be voting the remaining 24,998 shares. The company uses cumulative voting.
Required:
a. How many directors can Mr. Clark be sure of electing?
b. How many can Ms Rmasey be sure of electing
c. How many votes could clark have if he had all the uncommitted votes
d. Does that give him control?
e. If nine directors were to be elected, and Ms. Ramsey and her friends had 70,001 shares and Mr. Clark had 48,001 shares plus half the uncommitted votes, how many directors could Mr. Clark elect?
Answer:
Midland Petroleum
a. Mr. Clark can be sure of electing = 4 directors
b. Ms Ramsey can be sure of electing = 5 directors
c. If Mr. Clark had all the uncommitted votes, he can elect = 7 directors
d. With 7 directors, he has control.
e. Mr. Clark can elect (60,50/143,000 * 9) = 4 directors.
Explanation:
Board members = 12
Mr. Clark control = 42,001 shares or 35.295%
Ms. Ramsey control = 52,001 shares or 43.698%
Undecided shareholders = 24,998 shares or 21.01%
Total shareholding = 119,000 shares or 100%
Mr. Clark can elect = 35.295% of directors = 4
Ms. Ramsey can elect = 43.698% of directors = 5
Other shareholders can elect = 21.01% of directors = 3
New shareholding:
Ms. Ramsey and friends = 70,001 shares
Mr. Clark and half uncommitted votes = 60,500 (48,001 + 12,499)
Half of the other uncommitted votes = 12,499
Total votes = 143,000
Mr. Clark can elect (60,50/143,000 * 9) = 4 directors.
Acute Company manufactures a single product. On December 31, 2014, it adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was determined to be $300,000. Inventory data for succeeding years follow:
Year Ended December 31 Inventory at Respective Year-End Prices Relevant Price Index (Base Year 2014)
2015 $363,000 1.10
2016 420,000 1.20
2017 430,000 1.25
Required:
Compute the inventory amounts at December 31, 2015, 2016, and 2017, using the dollar-value LIFO inventory method for each year.
Answer:
Acute Company
Year Ended December 31 Inventory at
Respective Year-End Prices Relevant Price Index Dollar-value LIFO
2015 $363,000 1.10 $330,000
2016 420,000 1.20 350,000
2017 430,000 1.25 344,000
Explanation:
a) Data and Calculations:
Year Ended December 31 Inventory at Respective Year-End Prices Relevant Price Index (Base Year 2014)
Year Year-End Prices Price Index
2015 $363,000 1.10
2016 420,000 1.20
2017 430,000 1.25
Dollar-value LIFO:
2015 = $363,000/1.10 = $330,000
2016 = $420,000/1.20 = $350,000
2017 = $430,000/1.25 = $344,000
b) The implication is that the respective year-end prices are re-calculated using the 2014 base year index. This prunes the effect of inflation on the most recent prices when compared to the base year of 2014. It makes the ending inventories for the years to be comparable since the inflation-influenced cause has been removed.