Answer:
1. Defined Benefit Plan
2. debit Vacation Pay Expense; credit Vacation Pay Payable
Explanation:
1. With a Defined Benefit Plan, employers promise to pay employees a pension based on factors like years of service and salary. The plan will be sponsored by the employer and will be managed by the company.
2. As the Vacation is an expense, it will need to be debited to an expense account being the Vacation Pay Expense account. It will also be credited to the Vacation Pay Payable to reflect that this is a liability that the company must fulfil.
On April 1, 2021, Shoemaker Corporation realizes that one of its main suppliers is having difficulty meeting delivery schedules, which is hurting Shoemaker's business. The supplier explains that it has a temporary lack of funds that is slowing its production cycle. Shoemaker agrees to lend $420,000 to its supplier using a 12-month, 12% note.
Required:
1. The loan of $420,000 and acceptance of the note receivable on April 1, 2021
2. The adjustment for accrued interest on December 31, 2021
3. Cash collection of the note and interest on April 1, 2022.
Answer:
1. April 01, 2021
Dr Notes receivable 420,000
Cr Cash 420,000
2. December 31,2021
Dr Interest receivable 37,800
Cr Interest revenue 37,800
3. April 01, 2022
Dr Cash 470,400
Cr Notes receivable 420,000
Cr Interest receivable 37,800
Cr Interest revenue 12,600
Explanation:
Preparation of the Journal entries Shoemaker Corporation
1. Preparation of the Journal entry for loan o amount of $420,000 as well as the acceptance of the note receivable on April 1, 2021
April 01, 2021
Dr Notes receivable 420,000
Cr Cash 420,000
2. Preparation of the Journal entry for the adjustment for accrued interest on December 31, 2021
December 31,2021
Dr Interest receivable 37,800
Cr Interest revenue 37,800
($420,000 × 12% × 9/12=$37,800)
3. Preparation of the Journal entry for the Cash collection of the note and interest on April 1, 2022
April 01, 2022
Dr Cash 470,400
Cr Notes receivable 420,000
Cr Interest receivable 37,800
Cr Interest revenue 12,600
($420,000 × 12% × 3/12=$12,600)
If an investment center has a $90,000 controllable margin and $1,200,000 of sales, what average operating assets are needed to have a return on investment of 10%
Answer:
Average operating assets is $900,000
Explanation:
The formula for return on investment stated below is the starting for solving this question:
return on investment= Net operating income / Average operating assets
return on investment is 10%
net operating income is the same as controllable margin of $90,000
Average operating assets is the unknown
10%=90000/average operating assets
average operating assets=90000/10%
average operating assets=$900,000
Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms n/30. May 19 Replaced the April 20 account payable to Locust with a 90-day, 10%, $35,000 note payable along with paying $5,250 in cash. July 8 Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9%, $80,000 note payable. ___?___ Paid the amount due on the note to Locust at the maturity date. ___?___ Paid the amount due on the note to NBR Bank at the maturity date. Nov. 28 Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8%, $42,000 note payable. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Prepare journal entries for all the preceding transactions
Answer:
Tyrell Co.
Journal Entries:
April 20:
Debit Inventory $40,250
Credit Accounts Payable (Locust) $40,250
To record purchase of merchandise on credit, terms n/30.
May 19:
Debit Accounts Payable (Locust) $40,250
Credit 10% Notes Payable (Locust) $35,000
Credit Cash Account $5,250
To record the 90-day, 10% Notes Payable and payment of cash.
July 8:
Debit Cash Account $80,000
Credit 9% Notes Payable (NBR Bank) $80,000
To record the signing of a 120 day 9% bank note payable.
August 18:
Debit 10% Notes Payable (Locust) $35,000
Debit Interest Expense $875
Credit Cash Account $35,875
To record payment at maturity.
November 7:
Debit 9% Notes Payable (NBR Bank) $80,000
Debit Interest Expense $2,400
Credit Cash Account $82,400
To record payment at maturity.
Nov 28:
Debit Cash Account $42,000
Credit 8% Notes Payable (Fargo Bank) $42,000
To record the issue of 60-day, 8% note payable.
Dec. 31:
Debit Interest Expense $560
Credit Interest on Notes Payable $560
To accrue interest expense for one month.
Explanation:
Journal entries are used to initially record business transactions of Tyrell Co. as above. They show the two or more accounts involved in each transaction. The accounts that receive values are debited, while the others are credited. This also balances the accounting equation based on each transaction.
Flapjack Corporation had 7,600 actual direct labor hours at an actual rate of $12.41 per hour. Original production had been budgeted for 1,100 units, but only 950 units were actually produced. Labor standards were 7.0 hours per completed unit at a standard rate of $13.00 per hour. The direct labor time variance is
Answer:
-$12,350 Unfavorable
Explanation:
The computation of direct labor variance is shown below:
Labor time variance = (Standard hours - Actual hours) × standard rate
= (950 × 7.0 - 7,600) × $13
= (6,650 - 7,600) × $13
= -950 × $13
= -$12,350 Unfavorable
Therefore for computing the direct labor variance we simply applied the above formula by considering the given information
On October 5, Ivanhoe Company buys merchandise on account from Pharoah Company. The selling price of the goods is $5,240, and the cost to Pharoah Company is $3,180. On October 8, Ivanhoe Company returns defective goods with a selling price of $640 and a scrap value of $310. Record the transactions on the books of Pharoah Company, assuming a perpetual approach. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit choose a transaction date enter an account title to record credit sales Inventory enter a debit amount enter a credit amount enter an account title to record credit sales Accounts Payable enter a debit amount enter a credit amount (To record credit sales) enter an account title to record cost of goods sold on account Accounts Payable enter a debit amount enter a credit amount enter an account title to record cost of goods sold on account Inventory enter a debit amount enter a credit amount (To record cost of goods sold on account) choose a transaction date enter an account title to record credit granted for receipt of returned goods Accounts Receivable enter a debit amount enter a credit amount enter an account title to record credit granted for receipt of returned goods Sales Revenue enter a debit amount enter a credit amount (To record credit granted for receipt of returned goods) enter an account title to record scrap value of goods returned enter a debit amount enter a credit amount enter an account title to record scrap value of goods returned enter a debit amount enter a credit amount (To record scrap value of goods returned)
Answer:
From Pharaoh's point of view:
October 5, merchandise sold on account to Ivanhoe Company
Dr Accounts receivable 5,240
Cr Sales revenue 5,240
Dr Cost of goods sold 3,180
Cr Inventory 3,180
October 8, defective merchandise is returned
Dr Sales returns and allowances 640
Cr Accounts receivable 640
Dr Inventory 310
Cr Cost of goods sold 310
From Ivanhoe's point of view:
October 5, merchandise sold on account from Pharaoh Company
Dr Inventory 5,240
Cr Accounts payable 5,240
October 8, defective merchandise is returned
Dr Accounts payable 640
Cr Inventory 640
Individual Retirement Accounts (IRAs) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year.
a. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to _ and the level of investment spending to _.
b. An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government repeals a previously existing investment tax credit.
The repeal of the previously existing tax credit causes the interest rate to _______ and the level of investment to ________.
c. Initially, the government's budget is balanced, then the government responds to the conclusion of a war by significantly reducing defense spending without changing taxes.
This change in spending causes the government to run a budget __________ which ________ national saving. This causes the interest rate to ________ and the level of investment spending to _______
Answer:
a. Individual Retirement Accounts (IRAs) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year.
This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to _decrease and the level of investment spending to increase_.
b. An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government repeals a previously existing investment tax credit.
The repeal of the previously existing tax credit causes the interest rate to ___increase____ and the level of investment to ___decrease_____.
c. Initially, the government's budget is balanced, then the government responds to the conclusion of a war by significantly reducing defense spending without changing taxes.
This change in spending causes the government to run a budget ___surplus_______ which ___increases_____ national saving. This causes the interest rate to ___decrease_____ and the level of investment spending to __increase_____
Explanation:
Interest rate decreases with increased savings and this results to increased investment as funds are available at affordable costs. The situation is reversed when the savings are decreased, since the interest rate will increase as there are less savings for investment purposes.
There is a continuous interaction between taxation, savings, government spending, inflation, and investment versus interest rates. This means that interest rates also reflect these factors put together. This why in both fiscal and monetary policies, governments try to strike some balance in order to direct the economy towards desired targets. For example, when the government wants to stimulate the economy, it works to reduce interest rates in order to encourage investments, but this also lowers the propensity to save and encourages the propensity to spend, which trigger inflation and increases interest rate as an aftermath. And this seems to be an endless vicious or virtuous circle, depending on what is achieved by the monetary and fiscal measures in operation.
Carmen Camry operates a consulting firm called Help Today, which began operations on August 1. On August 31, the company’s records show the following selected accounts and amounts for the month of August.
Cash $25,330 Dividends $5,960
Accounts receivable 22,330 Consulting fees earned 26,970
Office supplies 5,210 Rent expense 9,510
Land 43,980 Salaries expense 5,580
Office equipment 19,970 Telephone expense 840
Accounts payable 10,730 Miscellaneous expenses 490
Common stock 101,500
Required:
Use the above information to prepare an August 31 balance sheet
Answer:
Help Today
Balance Sheet
For the month ended August 31, 202x
Assets:
Cash $25,330
Accounts receivable $22,330
Office supplies $5,210
Land $43,980
Office equipment $19,970
Total assets: $116,820
Liabilities and stockholders' equity:
Accounts payable $10,730
Common stock $101,500
Retained earnings $4,590
Total liabilities and stockholders' equity: $116,820
Explanation:
Income statement:
Consulting fees earned $26,970
Rent expense $9,510
Salaries expense $5,580
Telephone expense $840
Miscellaneous expenses $490
Net income $10,550
Retained earnings = net income - dividends = $10,550 - $5,960 = $4,590
Assume that your roommate is very messy. According to campus policy, you have a right to live in an uncluttered apartment. Suppose she gets a $200 benefit from being messy but imposes a $100 cost on you. The Coase theorem would suggest that an efficient solution would be for your roommate to
Answer: b. pay you at least $100 but less than $200 to live with the clutter.
Explanation:
The options are:
a. stop her messy habits or else move out.
b. pay you at least $100 but less than $200 to live with the clutter.
c. continue to be messy and force you to move out.
d. demand payment of at least $100 but no more than $200 to clean up after herself.
According to the Coase theorem, if a party has the rights to a property, then an efficient output level will be achieved when there is some sort of bargaining between the parties that are involved.
Since the roommate gets a $200 benefit from being messy but imposes a $100 cost on me, an efficient solution would be for my roommate to pay me at least $100 but less than $200 to live with the clutter.
A company is considering the purchase of new equipment for $57,000. The projected annual net cash flows are $23,400. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 8% return on investment. The present value of an annuity of 1 for various periods follows:
Periods Present value of an annuity of 1 at 12%
1 0.8929
2 1.6901
3 2.4018
What is the net present value of this machine assuming all cash flows occur at year-end?
a. $30,000
b. $4,500
c. $(4,736)
d. $34,500
e. $82,862
Answer:
Net Present Value = $3,304.069
Explanation:
To determine whether or not the investment was right, we will need to determine the net present value of the investment (NPV).
The NPV is the difference between the present value PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.
NPV of an investment(NPV)
NPV = PV of Cash inflows - PV of cash outflow
The cash inflow is an annuity.
PV of annuity= A× 1 -(1+r)^(-n)/r
A- Annual cash flow ,- 23,400 r - discount rate - 8%, number of years- 3
Present Value of cash inflow =23,400 × (1- (1.08)^(-3)/0.08 = 60,304.06
Initial cost = 57,000
Net Present Value = 60,304.06 - 57,000 = 3,304.069
Net Present Value = $3,304.069
Kindly note that a discount rate of 8% was used as it is the opportunity cost of capital for the investment.
Bermuda Triangle Corporation (BTC) currently has 390,000 shares of stock outstanding that sell for $102 per share. Assume no market imperfections or tax effects exist. Determine the share price and new number of shares outstanding if: (Do not round intermediate calculations. Round your price per share answers to 2 decimal places, e.g., 32.16, and shares outstanding answers to the nearest whole number, e.g., 32.) a. BTC has a five-for-three stock split. b. BTC has a 10 percent stock dividend. c. BTC has a 37.0 percent stock dividend. d. BTC has a four-for-seven reverse stock split.
Answer and Explanation:
The computation of each points is shown below:-
a. BTC has a five-for-three stock split is
New price = Old price × Split ratio
= 102 × 3 ÷ 5
= 61.2
New shares outstanding = old shares outstanding ÷ Split ratio
= 390,000 × 5 ÷ 3
= 650,000
b. BTC has a 10 percent stock dividend is
New price = Old price ÷ (1 + Stock dividend)
= 102 ÷ (1 + 0.1)
= 92.73
New shares outstanding = Old shares outstanding × (1 + Stock dividend)
= 390,000 × (1 + 0.1)
= 429,000
c. BTC has a 37.0 percent stock dividend is
New price = Old price ÷ (1 + Stock dividend)
= 102 ÷ (1 + 0.37)
= 74.45
New shares outstanding = Old shares outstanding × (1 + Stock dividend)
= 390,000 × (1 + 0.37)
= 534,300
d. BTC has a four-for-seven reverse stock split is
New price = Old price × Split ratio
= 102 × (7 ÷ 4)
= 178.5
New shares outstanding = Old shares outstanding ÷ Split ratio
= 390,000 × (4 ÷ 7)
= 222,857.14
If you put up $39,000 today in exchange for a 6.5 percent, 16-year annuity, what will the annual cash flow be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$3,992.73
Explanation:
For computing the annual cash flow we need to apply the PMT formula i.e to be shown in the attachment below:
Given that,
Present value = $39,000
Future value or Face value = $0
RATE = 6.5%
NPER = 16 years
The formula is shown below:
= PMT(RATE;NPER;-PV;FV;type)
The present value come in negative
So, after applying the above formula, the annual cash flow is $3,992.73
The Walthers Company has a semi-annual coupon bond outstanding. An increase in the market rate of interest will have which one of the following effects on this bond?
a. increase the coupon rate.
b. decrease the coupon rate.
c. increase the market price.
d. decrease the market price.
e. increase the time period.
Answer:
The answer is D.
Explanation:
An increase in the market rate of interest of a bond will decrease the market price of the bond. Market rate of interest of a bond is inversely related to the market price of the bond.
For example, A bonds is issued with a higher interest rate, the price of existing bonds will fall because the demand for this bond falls.
Cost reduction is still the number one priority for many supply chain executives, according to the MHI and Deloitte survey. Select one: True False
Answer:
MHI and Deloitte Survey
Cost Reduction #1 Priority
True
Explanation:
For supply chain companies to achieve their profit targets, they need to curtail costs. Consumers are not ready to absorb much costs as they are presented with low-priced alternatives. The competition for customers among supply chain organizations is very high. Everyone competes for the dollar the consumer is willing to spend on goods. With property and advertising costs skyrocketing, careful management of the cost structure is required.
Stellar Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory280$31$ 8,680 April 15 purchase4503716,650 April 23 purchase 270 40 10,800 1,000 $36,130 Compute the April 30 inventory and the April cost of goods sold using the LIFO method.
Answer:
inventory - $13,120
cost of goods sold - $23,010
Explanation:
LIFO means last in first out. It means that it is the last purchased inventory that is the first to be sold.
the cost of goods sold would be taken from the cost of the newest purchases.
April 23 purchase 270 x 40 = $ 10,800
600 - 270 = 330
April 15 purchase ; 330 x $37 = $12,210
cost of goods sold = $12,210 + $ 10,800 = $23,010
Inventory = the remaining part of the April 15 purchase and beginning inventory
450 - 330 = 120 x $37 = $4440
$4440 + 8,680 = $13,120
The structural unemployment rate is 1.7 percent, the frictional unemployment rate is 2.6 percent, and the economy's current unemployment rate is 3.9 percent. The economy is in:_______.
a. long-run equilibrium.
b. a recessionary gap producing more than Natural Real GDP.
c. a recessionary gap producing less than Natural Real GDP.
d. an inflationary gap producing Natural Real GDP.
e. an inflationary gap producing more than Natural Real GDP.
Answer:
a. long-run equilibrium.
Explanation:
In the circumstances that the structural unemployment rate is 1.7 percent, the frictional unemployment rate is 2.6 percent, and the economy's current unemployment rate is 3.9 percent. Then we can say that the economy is in a long-run equilibrium.
Structural unemployment can be defined as an involuntary unemployment that arises as a result of the incompatibility between a worker's skills set and requisite skills an employer seeks from the workers or due to technological changes.
Frictional unemployment is a form of unemployment which is voluntary because employees which to change jobs or move to another better job.
Hence, the economy is in a long-run equilibrium because the rate of unemployment has become constant, thus, prices and wages will be adjusted in order to reach wages equilibrium level.
An electric power plant uses solid waste for fuel in the production of electricity. the cost Y in dollars per hour to produce electricity is Y=11+0.4X+0.29X2, where X is in megawatts. Revenue in dollars per hour from the sale of electricity is 16X−0.2X2. Find the value of X that gives maximum profit. (Round to two decimal places.)
Answer:
The value of X that gives maximum profit is 15.92.
Explanation:
Before answering the question, Y and Revenue (R) given in the question are first correctly restated as follows:
Cost = Y = 11 + 0.4X + 0.29X^2 .......................................... (1)
Revenue = R = 16X − 0.2X^2 .............................................. (2)
Differentiating each of equations (1) and (2) with respect to X to obtain marginal cost (MC) and marginal revenue (MR), we have:
dY/dX = MC = 0.4 + 0.58X .................................................. (4)
dR/dX = MR = 16 - 0.4X ....................................................... (5)
In production theory, profit is maximized when MR = MC. Therefore, we equate equations (4) and (5) and solve for X as follows:
0.4 + 0.58X = 16 - 0.4X
0.58X + 0.4X = 16 - 0.4
0.98X = 15.6
X = 15.6 / 0.98
X = 15.92
Therefore, the value of X that gives maximum profit is 15.92.
In your opinion, can exchange rate volatility be managed? Why or why not? Explain your answer.
The correct answer to this open question is the following.
What I think about exchange rate volatility is that investors have to learn to manage this volatility because it is part of the stock market on a daily basis. Indeed, it is the nature of the game. Managing foreign exchange or FX, as it is also known, is of the utmost importance in this globalized world of investments. The price of goods and products that are exported such as iron, steel, or any other commodity has been very volatile in recent years, that is why investors and countries have to hire experts to manage their operations. One of the resources that can help investors regarding this issue is to mitigate the uncertainty with futures or currency forwards.
Bagwell's net income for the year ended December 31, Year 2 was $175,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2. At December 31 Year 2 Year 1 Common Stock, $5 par value $500,000 $450,000 Paid-in capital in excess of par 948,000 853,000 Retained earnings 688,000 582,000 A. $95,000. B. $201,000. C. $69,000. D. $79,000. E. $50,000.
Answer:
C. $69,000
Explanation:
Computation of the cash paid for dividends during Year 2
First step is to calculate the difference in Retained earnings for Year 2 and Year 1
Retained earnings =$688,000-$582,000
Difference in retained earnings =$106,000
Second step is to calculate for the cash paid for dividends during Year 2
Using this formula
Cash paid dividend = Year 2 Net income- Retained earnings difference
Let plug in the formula
Cash paid dividend=$175,000-$106,000
Cash paid dividend =$69,000
Therefore the cash paid for dividends during Year 2 will be $69,000
Carly Corporation issued $200,000 of 30-year, 8% bonds at 106 on January 1, 2016. Interest is payable semiannually on June 30th and December 31st. The straight-line method of amortization is to be used. After 11 years, what is the carrying value of the bonds?
Answer:
$207,600
Explanation:
The journal entry to record the issuance of the bonds:
January 1, 2016
Dr Cash 212,000
Cr Bonds payable 200,000
Cr Premium on bonds payable 12,000
Premium on bonds payable $12,000 / 60 semiannual coupons = $200 amortization per coupon payment
after 11 years, 22 coupons were paid 22 x $200 = $4,400
bonds carrying value after 11 years = $200,000 + $12,000 - $4,400 = $207,600
A fund earned a net investment income (i.e. Ending Balance Starting Balance + Deposits/Withdrawals)) of 9200 during 1999. The beginning and ending balances of the fund were 100000 and 129200, respectively. A deposit was made at time K during the year. No other deposits or withdraws were made. The fund earned 8% in 1999 using the dollar-weighted method. Determine then date corresponding to time K
(a) April 1 (b) May 1 (c) July 1 (d) Sept. 1 (e) Oct. 1
Answer:________
Answer:
k = April 1 ( A )
Explanation:
Given data :
net investment income : $9200
Beginning balance = $100000
ending balance = $129200
deposit made
no withdrawals
interest earned = 8%
net investment ( $9200) = [ending balance - (starting balance + deposits/withdrawals )]
9200 = 129200 - 100000 - deposits
deposit = 129200 -100000 - 9200 = 20000
8% interest was earned on starting balance
= 8% of $100000 = $8000
interest earned on the deposit made = net income - interest earned on beginning balance = 9200 - 8000 = $1200
using the dollar-weighted method
assuming the deposit was made for Y months
interest earned on deposit = deposit * interest rate * (y/12)
1200 = 20000 * 8% * ( y /12 )
hence ( y/12) = 0.75 hence y = 9 months from December 31
which makes K = April 1
The following data were reported by a corporation: Authorized shares 20,000 Issued shares 15,000 Treasury shares 3,000 The number of outstanding shares is:
Answer:
12,000
Explanation:
The following data was reported for an organisation
Authorized shares is 20,000
Issued shares is 15,000
Treasury shares is 3,000
Therefore, the number of outstanding shares can be calculated as follows
Number of outstanding shares= Issued stock-Treasury stock
= 15,000-3,000
= 12,000
Hence the number of outstanding shares is 12,000
On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:______.
Pumpkin Spice Cash 50,000 15,000 Accounts Receivable 70,000 25,000 Inventory 30,000 20,000 Land 150,000 80,000 Buildings and Equipment 250,000 200,000 Less: Accumulated Depreciation -70,000 -20,000 Investment in Spice Co. 210,000 Total Assets 690,000 320,000 Accounts Payable 40,000 10,000 Bonds Payable 150,000 40,000 Common Stock 300,000 90,000 Retained Earnings 200,000 180,000 Total Liabilities and Equity 690,000 320,000 At the date of the business combination, the book values of Spice's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000. 1. what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?
Answer:
Total inventory in consolidated balance = $60,000
Explanation:
In the consolidated balance sheet, we record the sum of both parent and subsidiary assets. Here pumpkin and spice both have an inventory of $30,000.
Total inventory in consolidated balance = Pimpkin's Inventory + fair value of Spice's inventory
Total inventory in consolidated balance = $30,000 + $30,000
Total inventory in consolidated balance = $60,000
When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elasticity of demand between erasers and pencils is
Answer:
The cross elasticity of demand is zero
Explanation:
Cross elasticity of demand measures the percentage change in the quantity demand of a product occasioned by a change in the price of another but related commodity.
If the the commodities are complements, the cross of elasticity of demand between them would be negative. his implies an increase(decrease) in the price of one would lead to a decrease(increase) in the demand of the other.
If the the commodities are substitutes, the cross elasticity of demand between them would be positive. This implies an increase(decrease) in the price of one would lead to a increase (decrease) in the quantity demand of the other.
Where the cross elasticity of demand is zero, this implies that the goods are not in any way related. This implies that a change in the price of one would produce no change in the quantity demand of the other.
Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment), and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for bad debt expense?
a. debit Bad Debt Expense, $21,800; credit Allowance for Doubtful Accounts, $21,800
b. debit Allowance dfor Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600
c. debit Allowance for Doubtful Accounts, $21,800; credit Debt Expense, $21,800
d. debit Bad Debt Expense, $17,600; crdit Allowance for Doubful Accounts, $17,600
Other receivables includes all of the followoing EXCEPT:
a. taes receivable
b. interest receivable
c. receivables from employees
d. notes receivabe
Answer:
1. Analysis of accounts receivables Allowance Required $19,700
Less: Credit balance available in Allowance account $2,100
Additional allowance required $17,600
The journal entry will be as follows
DEBIT CREDIT
Bad debt expenses $17,600
Allowance for doubtful accounts $17,600
Hence, the correct option is D.
2. Other receivables include all except "Notes Receivables"
Hence, the correct option is D
Inflation is a general rise in the level of prices experienced by people in a nation.
Answer:
True.
Explanation:
Inflation is an economic term that can be defined as the increase in the prices of a product on the market in a given period.
It can occur due to several factors, when there is an imbalance between supply and demand, then it is correct to say that when the demand for a product is greater than the supply, there will be an increase in prices and, consequently, inflation.
It can also occur when there are situations of monopoly, which is the pricing of a product controlled by a company.
Another factor that causes inflation is the increase in a company's production costs, which can be caused by factors such as scarcity, or economic crisis.
Uncontrolled inflation has a negative impact on the consumer's life, which starts to lose its purchasing capacity and has its quality of life reduced.
Prepare journal entries to record the following four separate issuances of stock.
1. A corporation issued 8,000 shares of $20 par value common stock for $192,000 cash.
2. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $33,000. The stock has a $1 per share stated value.
3. A corporation issued 4,000 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $33,000. The stock has no stated value.
4. A corporation issued 2,000 shares of $75 par value preferred stock for $183,000 cash.
Answer:
1.
DR Cash $192,000
CR Common stock. $160,000
CR Paid-in capital in excess of par value - Common stock $32,000
Working
Common Stock = $20 * 8,000
= $160,000
Paid-in capital in excess of par value - Common stock = 192,000 - 160,000
= $32,000
2
DR Organization expenses $33,000
CR Common stock, $4,000
CR Paid-in capital in excess of stated value - common stock $29,000
Working
Common Stock = 1 * 4,000
= $4,000
Paid-in capital in excess of stated value, common stock = 33,000 - 4,000
= $29,000
3
DR Organization expenses $33,000
CR Common stock $33,000
4
DR Cash $183,000
CR Preferred stock $150,000
CR Paid-in capital in excess of par value - preferred stock $33,000
Working
Preferred Stock = 75 * 2,000
= $150,000
Paid-in capital in excess of par value - preferred stock = 183,000 - 150,000
= $33,000
produces sports socks. The company has fixed expenses of $ 80 comma 000 and variable expenses of $ 0.80 per package. Each package sells for $ 1.60. Read the requirementsLOADING.... Requirement 1. Compute the contribution margin per package and the contribution margin ratio. Begin by identifying the formula to compute the contribution margin per package. Then compute the contribution margin per package. (Enter the amount to the nearest cent.)
Answer:
Instructions are below.
Explanation:
Giving the following information:
Unitary variable expenses= $ 0.80
Selling price per unit= $ 1.60
First, we need to calculate the unitary contribution margin:
Unitary contribution margin= selling price - unitary variable cost
Unitary contribution margin= 1.6 - 0.8
Unitary contribution margin= $0.8
Now, the contribution margin ratio:
contribution margin ratio= contribution margin / sellig price
contribution margin ratio= 0.8/1.6
contribution margin ratio= 0.5
Assume the MPC is 0.8. Assuming only the multiplier effect matters, a decrease in government purchases of $100 billion will shift the aggregate demand curve to the:__________
a. left by $180 billion.
b. left by $500 billion.
c. right by $180 billion.
d. right by $400 billion.
Answer:
b. left by $500 billion.
Explanation:
Given marginal propensity to consume, MPC = 0.8
Marginal propensity to consume + Marginal propensity to save = 1
MPC + MPS = 1
0.8 + MPS = 1
MPS = 1-0.8
MPS = 0.2
Now, the government multiplier = 1/MPS
The government multiplier = 1 / 0.2 = 5
Total fall in aggregate demand = Government multiplier × Government purchases
= 5 ×100
= $500
Since there is a fall in spending so the aggregate demand curve will shift leftwards.
Therefore, the correct option is b. left by $500 billion.
Suppose that a perfectly competitive firm faces a market price of $7 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output level of 1 comma 400 units. If the firm produces 1 comma 400 units, its average variable costs equal $6.50 per unit, and its average fixed costs equal $0.80 per unit.
Required:
a. What is the firm's maximizing (or loss-minimizing output level?
b. What is the amount of it's economic profits (or losses) at this output level?
Answer:
1. This firm have the profit maximizing output level of 1400 units because a firm in any industry will maximize profit where MR=MC. Here MR is equal to MC at the output level of 1400. So profit maximizing level of output is 1400 units.
2. Economic profit = Total revenue - total cost.
Where, Total revenue = Quantity * price
= 1400 * 7
= $9,800
Total variable cost = AVC * quantity
= 6.50 *1400
= $9,100
Total fixed cost = AFC * quantity
= 0.80 * 1400
= $1,120
Economic profit = Total revenue - Total variable cost - Total fixed cost
Economic profit = $9,800 - $9,100 - $1,120
Economic profit = -$420
. The firm is having economic loss equal to 420.
Conclusion: This firm is facing economic loss in its output.
Following is a partial process cost summary for Mitchell Manufacturing's Canning Department. Equivalent Units of Production Direct Materials Conversion Units Completed and transferred out 52,000 52,000 Units in Ending Work in Process: Direct Materials (18,000 * 100%) 18,000 Conversion (18,000 * 80%) 14,400 Equivalent Units of Production 70,000 66,400 Cost per Equivalent Unit Costs of beginning work in process $ 43,600 $ 63,900 Costs incurred this period 145,500 195,700 Total costs $ 189,100 $ 259,600 Cost per equivalent unit $ 2.70 per EUP $ 3.91 per EUP If the units completed were transferred to the Labeling Department, what is the appropriate journal entry to transfer the conversion costs
Answer:
DR Work in Process—Labeling................ $203,320
CR Work in Process—Canning......................................... $203,320
(To record transfer of conversion costs to Labelling Department.)
Units completed in the Canning department are 52,000 and costs per equivalent units of production for conversion is $3.91.
Total costs of conversion is therefore;
= 52,000 * 3.91
= $203,320