Answer:
• To ensure that there is no income leakage whatsoever
• Ensure that there is no customer complaint made to the company's executives
• Early closure not later than 5pm daily, Monday to Friday
• Ensure customer survey ratings of at least 8.0
• Drive paperless environment.
• Daily reconciliation of the bank's transit accounts.
Explanation:
I used to belong to a team called settlement and reconciliation , which is under operations support, business banking in one of the top financial institution.
The goals are as listed above. For instance as a settlement and reconciliation team, you must ensure accurate settlement of all merchants such that none would receive excess settlement s which could deplete the bank's income. Also, there must be no customer complaint escalated to the bank's executives hence team must promptly resolve all queries and complaint.
Another goal is to drive early closure. No member of staff must remain in the office after 5pm unless permission is obtained to deal urgent transaction. Each year, the bank conducts internal survey among departments to know how well we treat our internal and external stakeholders. The least score approved for my team is 8.0 out of 10 , which must be met.
Again, one of the goals of the bank is paperless drive which was included in each team or unit's goals. We support the drive for paperless transactions by suggesting means to consummate transactions without printing. We must also ensure daily and timely reconciliation of all our transit accounts in order to ensure that no idle fund is sitting in there.
Barb Campbell owns an entertainment company which has increased both its profits and revenues over an extended period of time. Barb's firm is experiencing:
Answer:
sustained growth
Explanation:
Based on this information it seems that Barb's firm is experiencing sustained growth. This term refers to the realistically attainable amount of growth that a company can have without running into problems. If a business grows way too fast it will not be able to fund that growth, but if they do not grow enough then they will amass debt and fail. Sustainable Growth is usually the goal for new companies.
Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,150,000 in 2021 for the mining site and spent an additional $630,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving of roads and replacing a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Cash flow Probability
1 $330,000 25%
2 430,000 40%
3 630,000 35%
To aid extraction, Jackpot purchased some new equipment on July 1, 2021, for $150,000. After the copper is removed from this mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 10%.
Required:
a. Determine the cost of the copper mine.
b. Prepare the journal entries to record the acquisition costs.
Answer:
a. Determine the cost of the copper mine.
$2,104,430b. Prepare the journal entries to record the acquisition costs.
Date X, 2021, acquisition of copper mine
Dr Copper mine 2,104,430
Cr Cash 1,780,000
Cr Asset retirement liability 324,430
July 1, 2021, acquisition of mining equipment
Dr Equipment 150,000
Cr Cash 150,000
Explanation:
estimated restoration costs = ($330,000 x .25) + ($430,000 x .4) + ($630,000 x .35) = $475,000
now we must adjust the restoration cost and determine its present value = $475,000 x 0.68301 (present value factor, 10%, 4 periods) = $324,430
total cost of copper mine = purchase cost + preparation costs + restoration costs = $1,150,000 + $630,000 + $324,430 = $2,104,430
"Alou Company has 20,000 beginning finished goods units. Budgeted sales units are 160,000. If management desires 15,000 ending finished goods units, what are the required units of production
Answer:
155,000
Explanation:
The computation of the required units of production is shown below:-
Required units of production = Sales units + Ending finished goods - Beginning finished goods
= 160,000 units + 15,000 units - 20,000 units
= 155,000
Therefore for computing the required units of production we simply applied the above formula.
A "tariff" on imported products is an example of a trade barrier that is always preferred to the free trade, because it generates government revenues in addition to restricting the amounts of imports.
A. True
B. False
Answer:
The answer is true
Explanation:
One of the most common trade barriers is a tariff. Tariff is a tax imposed by the government on imported goods and services. Imposing tariffs on imported goods and services raise their prices.
Imposing tariff on imported goods can either be done to raise government revenue or to protect indigenous companies.
The balanced scorecard approach relies not only on financial performance measures, but includes customers, internal business processes, and organizational learning and growth.
a. True
b. False
Harmony Company sells handminusknit scarves. Each scarf sells for $ 45. The company pays $ 70 to rent vending space for one day. The variable costs are $ 12 per scarf. How many scarves should the company sell each day in order to break even? (Round your answer up to the nearest whole scarf.)
Answer:
2.12, rounded up to 3
Explanation:
To solve the equation, we first need to set up an equation.
Let x represent the number of scarves. We want one side of the equation to be the amount earned and the other to be the cost
45x is how much they earn since each scarf is $45
70+12x is how much they cost for rent and production
45x=70+12x
Subtract 12x from both sides
33x=70
Divide both sides by 33
x=2.12
It says we should round up so 3 scarves to break even
g The aggregate supply curve shifts A. rightward if the money wage rate falls. B. leftward if the aggregate demand curve shifts leftward. C. rightward if potential GDP decreases. D. leftward if potential GDP increases. E. rightward if the money wage rate rises.
Answer:
The correct option to the question above is option A "rightward if the money wage rate falls."
Explanation:
The aggregate supply curve is a graphical illustration of how the total quantity of goods and services is available for a given price and time.
When the aggregate supply curve shifts to the right, it increases. While, when the aggregate supply curve shifts to the left, it decreases.
An increase in the aggregate supply curve shows a fall in price, which makes a high price level resulting in a greater supply of real GDP.
Money wages is the amount of money paid in wages. Money wages is indirectly proportional to real wages. The aggregate supply curve decreases if the money wage rate increases and the aggregate supply curve increases when the money wage rate falls.
Aggregate supply is affected by GDP. When A GDP decreases, it also decreases aggregate supply.
Lindon Company is the exclusive distributor for an automotive product that sells for $34.00 per unit and has a CM ratio of 30%. The company’s fixed expenses are $193,800 per year. The company plans to sell 21,600 units this year. Required: 1. What are the variable expenses per unit? (Round your "per unit" answer to 2 decimal places.) 2. What is the break-even point in unit sales and in dollar sales? 3. What amount of unit sales and dollar sales is required to attain a target profit of $91,800 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $3.40 per unit. What is the company’s new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $91,800?
Answer:
1. $23.80
2. Break even Point (units) = 19,000 units and Break even Point (dollars) = $646,000
3. Unit sales to attain a target profit = 28,000 units and Dollar sales to attain a target profit = $952,000
4. Break even Point (units) = 28,500 units, Break even Point (dollars) = $969,000 and Dollar sales to attain a target profit = $1,428,000.
Explanation:
Variable Cost % = 100% - 30%
= 70%
Thus, variable expenses per unit = $34.00 × 70%
= $23.80
Break even Point is the level of activity where a firm makes neither a profit nor a loss.
Break even Point (units) = Fixed Cost / Contribution per unit
= $193,800 / ($34.00 ×30%)
= $193,800 / $10.20
= 19,000 units
Break even Point (dollars) = Fixed Cost / CM Ratio
= $193,800 / 0.30
= $646,000
Unit sales to attain a target profit = (Fixed Cost + Target Profit) / Contribution per unit
= ($193,800 + $91,800) / $10.20
= 28,000
Dollar sales to attain a target profit = (Fixed Cost + Target Profit) / CM Ratio
= ($193,800 + $91,800) / 0.30
= $952,000
When variable expenses reduce by $3.40 per unit.
Break even Point (units) = Fixed Cost / Contribution per unit
= $193,800 / ($34.00 - $23.80 - $3.40 )
= $193,800 / $6.80
= 28,500 units
Break even Point (dollars) = Fixed Cost / CM Ratio
= $193,800 / ($6.80/ $34.00)
= $969,000
Dollar sales to attain a target profit = (Fixed Cost + Target Profit) / CM Ratio
= ($193,800 + $91,800) / 0.20
= $1,428,000
Karim Corp. requires a minimum $9,900 cash balance. If necessary, loans are taken to meet this requirement at a cost of 2% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $10,300 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow.
July August September
Cash receipts $25,900 $33,900 $41,900
Cash payments 30,850 31,900 33,900
Prepare a cash budget for July, August, and September.
Answer:
Karim Corp.
Cash Budget
For July, August and September
JULY$ AUGUST$ SEPTEMBER$
Beginning cash balance 10,300 9,900 9,900
Cash receipts 25,900 33,900 41,900
Total cash available 36,200 43,800 51,800
Cash payment 30,850 31,900 33,900
Interest on bank loan 0 91 53
Preliminary cash balance 5,350 11,809 17,847
Additional loan(loan repayment) 4,550 -1,909 -2,641
Ending cash balance 9,900 9,900 15,206
Loan Balance
Loan balance - Beginning of month 0 4,550 2,641
Additional loan(loan repayment) 4,550 -1,909 -2,641
Loan balance - End of month 4,550 2,641 0
August Interest on bank loan = 4550 * 2% = $91
September interest on loan = 2641 * 2% = 52.82 = $53
Given the following cash flows for a capital project, calculate its payback period and discounted payback period. The required rate of return is 8 percent.
Year
0 1 2 3 4 5
Glass Flows $51100 $13150 $16050 $23900 $12400 $3050
The discounted payback period is:________.
a. 0.39 year longer than the payback period.
b. 0.64 year longer than the payback period.
c. 0.76 years longer than the payback period.
d. 0.25 years longer than the payback period.
Answer:
c. 0.76 years longer than the payback period.
Explanation:
Payback period calculates how long it takes to recover the amount invested in a project from its cumulative cash flows.
the amounted invested in the project = $-51100
In year 1, the amount recovered = $-51,100 + $13150 = $-37,950
In year 2, the amount recovered = $-37,950 + $16050 = $-21,900
In year 3, the amount recovered = $-21,900 + $23900 = $2000
the amount invested is recovered in 2 + 21,900 / 23900 = 2.92 years
Discounted payback period calculates how long it takes to recover the amount invested in a project from its cumulative cash flows.
discounted cash flows
$13150 / 1.08 = $12,175.93
$16050 / 1.08^2 = $13,760.29
$23900 / 1.08^3 = $18972.59
$12400 / 1.08^4 = $9114.37
the amount is recovered in 3 + 6191.19 / 9114.37 = 3.68 years
the discounted payback is longer than the payback period by 3.68 years - 2.92 years = 0.76 years
Constanza, who is single, sells her current personal residence (adjusted basis of $262,500) for $735,000. She has owned and lived in the house for 30 years. Her selling expenses are $36,750. What is Constanza’s realized and recognized gain? Constanza’s realized gain is $ and her recognized gain would be $ .
Answer:
Realized gain $435,750
Recognized gain$ 185,750
Explanation:
Calculation for Constanza’s realized and recognized gain
The realized gain will be calculated as :
Amount realized $698,250
($735,000 − $36,750)
Less the Adjusted basis ($262,500)
Realized gain $435,750
Constanza’s Recognised gain
Realized gain $435,750
Less Section 121 exclusion ($250,000)
Recognized gain$ 185,750
Therefore Constanza’s realized gain is $435,750 and her recognized gain would be $186,750 .
A bond has a $1,000 par value, 20 years to maturity, and pays a coupon of 5.5% per year, annually. The bond is callable in ten years at $1,075. If the bond’s yield to maturity is 5.89% per year, what is its yield to call? Question 13 options: A) 5.87% B) 6.57% C) 6.11% D) 6.43% E) 6.68%
Answer:
6.68% , option E is correct
Explanation:
The price of the bond can be computed using the below formula for bond price calculation:
bond price=face value/(1+r)^n+coupon*(1-(1+r)^-n)/r
face value is $1000
r is the yield to maturity which is 5.89%
coupon=face value*coupon rate=1000*5.5%=55
n is the number of coupons the bond would pay which is 11 coupons over 20 years
bond price=1000/(1+5.89%)^20+55*(1-(1+5.89%)^-20)/5.89%
bond price=$ 954.87
The yield on the call can be determined using excel rate function as further explained below:
=rate(nper,pmt,-pv,fv)
nper is the number of coupons the bond would pay before being called in ten years' time i.e 10 coupons
pmt is the is the amount of annual coupon=$1000*5.5%=$55
pv is the current price of $954.87
fv is the call price which is $1,075
=rate(10,55,-954.87,1075)=6.68%
Bogart Company is considering two alternatives. Alternative A will have revenues of $147,400 and costs of $103,400. Alternative B will have revenues of $188,200 and costs of $121,600. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income.
Answer:
B is better than A
Explanation:
Here, we want to compare “A” to “B”. It means if B’s amount is higher than A’s amount, it should be positive; If B’s amount is lower than A’s amount, it should be negative.
Net income for each alternative = Revenues – Costs
Since the net income is positive, B is better than A.
Please check attachment for for actual tabular calculations
The following is information for Palmer Co.:
2017 2016 2015
Cost of goods sold $643,825 $426,650 $391,300
Ending inventory 97,400 87,750 92,500
Required:
(a) Use the above information to compute inventory turnover for 2016, and its days' sales in inventory at December 31, 2016.
Numerator / Denominator = Ratio
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory ?
(b) Use the above information to compute inventory turnover for 2017, and its days' sales in inventory at December 31, 2017.
Numerator / Denominator = Ratio
Inventory turnover $643,825 / $92,575 = 7.0times
Days' sales in inventory ?
Answer:
a.
i. 4.7 times
ii. 77.1 days
b
i. 7 times
ii. 52.1 days
Explanation:
Inventory turnover = cost of goods sold / average inventory
average inventory for 2016 = ( 87,750 + 92,500 ) / 2 = $90,125
Inventory turnover $426,650 / $90,125 = 4.7 times
Days' sales in inventory = 365 / inventory turnover = 77.1 days
for 2017
inventory turnover = cost of goods sold / average inventory
average inventory for 2017 = ( 97,400 + 87,750 ) / 2 = $92,575
Inventory turnover $643,825 / $92,575 = 7.0 times
Days' sales in inventory = 365 / inventory turnover = 52.1 days
Galvatron Metals has a bond outstanding with a coupon rate of 6.1 percent and semiannual payments. The bond currently sells for $947 and matures in 23 years. The par value is $1,000 and the company's tax rate is 40 percent. What is the company's aftertax cost of debt
Panner, Inc., owns 30 percent of Watkins and applies the equity method. During the current year, Panner buys inventory costing $126,000 and then sells it to Watkins for $180,000. At the end of the year, Watkins still holds only $26,400 of merchandise. What amount of gross profit must Panner defer in reporting this investment using the equity method
Answer:
The gross profit that will be deferred is $2376
Explanation:
The cost of inventory = $126000
Selling price of inventory (revenue) = $180000
The remaining inventory with Watkins = $26400
Gross profit percentage = (revenue – cost) / revenue
Gross profit percentage = (180000 – 126000) / 180000 = 0.3 or 30%
Remaining value = $26400 × 30% = 7920
Ownership = 7920 × 30% = $2376
The gross profit that will be deferred is $2376
The American car battery industry boasts that its recycling rate now exceeds 95%, the highest rate for any commodity. However, with changes brought about by specialization and globalization, parts of the recycling system are moving offshore. This is particularly true of automobile batteries, which contain lead. The Environmental Protection Agency (EPA) is contributing to the offshore flow with newly implemented standards that make domestic battery recycling increasingly difficult and expensive. The result is a major increase in used batteries going to Mexico, where environmental standards and control are less demanding than they are in the U.S. One in five batteries is now exported to Mexico. There is seldom difficulty finding buyers because lead is expensive and in worldwide demand. While U.S. recyclers operate in sealed, mechanized plants, with smokestacks equipped with scrubbers and plant surroundings monitored for traces of lead, this is not the case in most Mexican plants. The harm from lead is legendary
The correct answer to this open question is the following.
The question is incomplete. There are parts of the question missing. Indeed, there is no question posted, it is just a statement.
However, we can do research and comment on the following.
We are facing two scenarios here. Both, ethical dilemmas that need to be solved.
1) as an independent auto repair shop owner that tries to safely dispose of a few old batteries each week. (Your battery supplier is an auto parts supplier who refuses to take your old batteries.)
In this case, I would check the original agreement with the supplier to see if there is a clause on old batteries management. If not, I would ask it to help me solve this issue because I am his client and has to take care of me and the environment. Otherwise, I would have to contemplate the option of changing supplier.
2) I am the manager of a large retailer responsible for the disposal of thousands of used batteries each day.
In this other case, I would follow the Environmental Department rules and regulations to comply with the correct procedures. This means to ask for support and orientation to get all the revisions to work properly. Because I know all the consequences of not recycling correctly or the damage done to humans and the environment. So although it could be more money, and would modernize my equipment to better manage the disposal of batteries. It would be an investment, not an expense.
Factory Overhead Rates, Entries, and Account Balance Eclipse Solar Company operates two factories. The company applies factory overhead to jobs on the basis of machine hours in Factory 1 and on the basis of direct labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows: Factory 1 Factory 2 Estimated factory overhead cost for fiscal year beginning August 1 $18,500,000 $44,000,000 Estimated direct labor hours for year 800,000 Estimated machine hours for year 1,250,000 Actual factory overhead costs for August $1,515,800 $3,606,300 Actual direct labor hours for August 64,500 Actual machine hours for August 105,000 a. Determine the factory overhead rate for Factory 1. Round your answer to two decimal places.
Answer:
Predetermined manufacturing overhead rate= $14.8 per machine hour
Explanation:
Giving the following information:
Factory 1
Estimated factory overhead= $18,500,000
Estimated machine hours for year 1,250,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 18,500,000/1,250,000
Predetermined manufacturing overhead rate= $14.8 per machine hour
When a country produces on its production possibilities curve, then this country's unemployment is expected to be at one of its lowest rates, however, prices in this country are not expected to be relatively low.
a. True
b. False
Answer:
TRUE
Explanation:
the production possibility curve shoes the number of goods that can be produced in an economy when its resources are fully employed.
if a country produces on its production possibilities curve, it means that its resources are fully employed and so unemployment would be at its lowest.
Meginnis Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 5.20 Direct labor $ 3.75 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 2.60 Fixed selling expense $ 0.50 Fixed administrative expense $ 0.40 Sales commissions $ 1.50 Variable administrative expense $ 0.50 If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to
Answer:
$53,700
Explanation:
Direct manufacturing cost = (Direct material per unit + Direct labor per unit) * Units produced
=($5.20 + $3.75) * 6,000 units
=$8.95 * 6,000
=$53,700
The total amount of direct manufacturing cost incurred is closest to $53,700
Justin hires Miguel to sell his baseball glove for $560. As part of their contract, Justin will pay him $100 to conduct the sale. Justin is a _______________________. Group of answer choices
Answer: Factee
Explanation:
This is a factorage transaction in which Justin will pay Miguel to act as an intermediary who will sell the baseball glove and receive a commission. That commission is known as a Factorage.
In a Factorage transaction, the intermediary being paid to sell the product is considered to be the Factor and the person who will pay for the product to be sold is the Factee. Justin in this scenario is paying for the baseball glove to be sold and so is the Factee.
On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date. Sales Company's stockholders' equity consisted of common stock, $100,000; other contributed capital, $40,000; and retained earnings, $140,000. Pert Company paid more than the book value of net assets acquired because the recorded cost of Sales Company's land was significantly less than its fair value.
During 2014 Sales Company earned $148,000 and declared and paid a $50,000 dividend. Pert Company used the partial equity method to record its investment in Sales Company.
Required:
1. Prepare the investment-related entries on Pert Company's books for 2014.
2. Prepare the working paper eliminating entries for a working paper on December 31, 2014.
Answer and Explanation:
The journal entries are shown below:
a. For investment related entries
Investment in sales Dr $350,000
To cash $350,000
(being the investment is recorded)
Investment in sales Dr ($148,000 × 85%) $125,800
To Subsidiary income $125,800
(Being the investment in sales is recorded)
Cash Dr $42,500
To Dividend income $42,500
(Being the dividend income is recorded)
b. For work paper eliminating entries
Equity income ($148,000 × 85%) $125,800
To Dividend $42,500
To investment in sales $83,300
(Being the equity income is recorded)
Common stock Dr $100,000
Other contributed capital Dr $40,000
Retained earnings Dr $140,000
Difference between implied and book value Dr $131,765 (Bal figure)
To Investment in S Company $350,000
To Non controlling interest $61,765 ($350,000 ÷ 0.85 × 0.15)
(Being the consolidated items are recorded)
Land Dr $131,765
To Difference between implied and book value Dr $131,765
(Being the land is recorded)
Working note:
Particulars Parent share Non-conrolling interest Total value
Purchase price
& implied value $350,000 $61,765 $411,765
Less:
Book value -$238,000 -$42,000 -$280,000
Difference
amount $112,000 $19,765 $131,765
Less:
Land value -$112,000 -$19,765 -$131,765
Balance $0 $0 $0
To reduce product development time, Caterpillar connected its engineering and manufacturing divisions with its active suppliers, distributors, overseas factories, and customers, through ________.
Answer: an extranet
Explanation:
An extranet is a private network that is controlled that gives access to vendors, suppliers, partners, vendors or a group of customers that are authorized.
Therefore, to reduce product development time, Caterpillar connected its engineering and manufacturing divisions with its active suppliers, distributors, overseas factories, and customers, through an extranet.
Danaher Woodworking Corporation produces fine furniture. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated lathe. Additional information is provided below for the most recent month: Estimates at the beginning of the month: Estimated total fixed manufacturing overhead $ 36,400 Capacity of the lathe 400 hours Actual results: Actual total fixed manufacturing overhead $ 36,400 Actual hours of lathe use 380 hours Required: a. Calculate the predetermined overhead rate based on capacity. b. Calculate the manufacturing overhead applied. c. Calculate the cost of unused capacity.
Answer:
a. Calculate the predetermined overhead rate based on capacity.
$91 per lathe hourb. Calculate the manufacturing overhead applied.
$34,580c. Calculate the cost of unused capacity.
$1,820Explanation:
Estimated total fixed manufacturing overhead $36,400
Capacity of the lathe 400 hours
predetermined overhead rate per lathe hour = $36,400 / 400 = $91
actual results:
Actual total fixed manufacturing overhead $36,400
Actual hours of lathe use 380 hours
applied overhead = $91 x 380 lathe hours = $34,580
cost of unused capacity = $36,400 - $34,580 = $1,820
Which of the following is an advantage of a partnership?
A.ease of starting and ending the business
B. Shared management and pooled skills
C. Unlimited liability
D. Little time commitment
Answer:
B
Explanation:
as if u share a business then the time and management is also shared
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On June 10, 20X8, Playoff Corporation acquired 100 percent of Series Company's common stock. Summarized balance sheet data for the two companies immediately after the stock acquisition are as follows:
Playoff Corp. Series Company
Item Book Value Fair Value
Cash $ 15,000 $ 5,000 $ 5,000
Accounts Receivable 30,000 10,000 10,000
Inventory 80,000 20,000 25,000
Buildings & Equipment (net) 120,000 50,000 70,000
Investment in Series Stock 100,000
Total $ 345,000 $ 85,000 $ 110,000
Accounts Payable $ 25,000 $ 3,000 $ 3,000
Bonds Payable 150,000 25,000 25,000
Common Stock 55,000 20,000
Retained Earnings 115,000 37,000
Total $ 345,000 $ 85,000 $ 28,000
Required:
a. Prepare the consolidating entries required to prepare a consolidated balance sheet immediately after the acquisition of Series Company shares. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Record the excess value (differential) reclassification entry.
Answer:
a. Consolidating Journal Entries:
Description Debit Credit
June 10, 20X8:
Cash $5,000
Accounts receivable 10,000
Inventory 25,000
Building & Equipment 70,000
Unrealized Gain on fair value $25,000
Accounts payable 3,000
Bonds payable 25,000
Investment in Series Stock 100,000
Excess Value (differential) 43,000
To record consolidating entries in the consolidated parent.
Goodwill 43,000
Excess Value (differential) 43,000
To record the reclassification of the excess value as Goodwill on acquisition.
Explanation:
a) Summarized balance sheet data
Playoff Corporation Series Company
Item Book Value Fair Value
Cash $ 15,000 $ 5,000 $ 5,000
Accounts Receivable 30,000 10,000 10,000
Inventory 80,000 20,000 25,000
Buildings & Equipment (net) 120,000 50,000 70,000
Investment in Series Stock 100,000
Total $ 345,000 $ 85,000 $ 110,000
Accounts Payable $ 25,000 $ 3,000 $ 3,000
Bonds Payable 150,000 25,000 25,000
Common Stock 55,000 20,000
Retained Earnings 115,000 37,000
Total $ 345,000 $ 85,000 $ 28,000
b) Consolidated entries are made for assets and liabilities acquired of the subsidiary using fair values. An unrealized gain on fair value account is created to account for the differences in fair values. Any excess or differential after consolidation and above the fair values is regarded as Goodwill arising from the acquisition.
Suppose the price level and value of the U.S. Dollar in year 1 are 1 and $1, respectively. Instructions: Round your answers to 2 decimal places. a. If the price level rises to 1.55 in year 2, what is the new value of the dollar
Answer: $0.65
Explanation:
The Price Level and the value of a currency are inversely related because inflation erodes the value of the currency. Therefore if the price level increases, the value of the currency drops. The reverse is true.
The formula therefore is is;
New Value = [tex]\frac{1}{Price Level}[/tex]
New Value = [tex]\frac{1}{1.55}[/tex]
New Value = 0.6452
New Value = $0.65
Sudoku Company issues 7,000 shares of $7 par value common stock in exchange for land and a building. The land is valued at $45,000 and the building at $85,000. Prepare the journal entry to record issuance of the stock in exchange for the land and building.
Answer:
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Explanation:
The price of Common Stock is equivalent to the price required to settle the Market Cost of Land and Buildings.
Also note that the Common Stocks have a par vale of $7, this means that any amount paid in excess of the par value is accounted in the Share Premium Reserve.
The journal entry to record this exchange is :
Land $45,000 (debit)
Buildings $85,000 (debit)
Common Stocks $49,000 (credit)
Share Premium $81,000 (credit)
Land $45,000
Building $85,000
To Common stock $49,000 (7,000 shares × $7)
To Premium on issue of common stock 81,000
(Being recording of the issuance of the stock in exchange for the land and building)
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1. Peter applied for a job at an accounting firm and a consulting firm. He knows that 50% of similarly qualified applicants receive job offers from the accounting firm; only 40% of similarly qualified applicants receive job offers from the consulting firm Peter also knows that 60% of similarly qualified applicants receive an offer from one firm or the other. Hints: A
Answer:
75%
Explanation:
Assume that:
X is the probability that the Peter, qualified accountant would receive offer from the accounting firm AND
Y is the probability that the Peter, qualified accountant would receive offer from the consulting firm.
Here,
P(X) is 50%, P(Y) is 40% and P(X∪Y) is 60%
Now we want to find P(X/Y) = ?
We also know that:
P(X/Y) = P(X∩Y) STEP1 / P(Y)
By putting values, we have:
P(X/Y) = 0.3 / 0.4 = 0.75 = 75%
Step 1: Find P(X∩Y)
P(X∪Y) = P(X) + P(Y) - P(X∩Y)
This implies that:
P(X∩Y) = P(X) + P(Y) - P(X∪Y)
By putting values we have:
P(X∩Y) = 0.5 + 0.4 - 0.6 = 0.3
Mountain High Ice Cream Company transferred $65,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,500). Mountain High anticipates a $3,500 recourse obligation. The bank charges a 3% fee (3% of $65,000), and requires that amount to be paid at the start of the factoring arrangement.
Required:
Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met.
Answer:
Dr Cash 56,550
Dr Receivable from factor 5,500
Dr Loss on sale of receivables 6,450
Cr Accounts receivables 65,000
Cr Recourse liability 3,500
Explanation:
cash = ($65,000 x 90%) - factoring fees = $58,500 - $1,950 = $56,550
factoring fees = $65,000 x 3% = $1,950
loss on sale of receivables (includes factoring fees) = (accounts receivables + recourse liability) - (cash + receivable from factor) = ($65,000 + $3,500) - ($56,550 + $5,500) = $68,500 - $62,050 = $6,450