Answer:
The amount of Current liabilities is $7,710
Explanation:
The amount of current liabilities on the classified balance sheet is seen below;
Constable Corp.
Balance sheet as at December 31, year 1.
Current liabilities
Accounts payable $4,540
Wages payable $3,170
Total $7,710
Camptown Togs, Inc., a children’s clothing manufacturer, has always found payroll processing to be costly because it must be done by a clerk so that the number of piece-goods coupons received by each employee can be collected and the types of tasks performed by each employee can be calculated. Not long ago, an industrial engineer designed a system that partially automates the process by means of a scanner that reads the piece-goods coupons. Management is enthusiastic about this system because it utilizes some personal computer systems that were purchased recently. It is expected that this new automated system will save $45,000 per year in labor. The new system will cost about $30,000 to build and test prior to operation. It is expected that operating costs, including income taxes, will be about $5,000 per year. The system will have a five-year useful life. The expected net salvage value of the system is estimated to be $3,000.
(a) Identify the cash inflows over the life of the project.
(b) Identify the cash outflows over the life of the project.
(c) Determine the net cash flows over the life of the project.
Answer:
a. Time period Cash Inflow
Year 1 $45,000
Year 2 $45,000
Year 3 $45,000
Year 4 $45,000
Year 5 $48,000 ($45,000+$3,000)
b. Time period Cash Outflow
Year 0 $30,000
Year 1 $5,000
Year 2 $5,000
Year 3 $5,000
Year 4 $5,000
Year 5 $5,000
c. Time period Cash Inflow Cash Outflow Net Cash Flow
Year 0 $0 $30,000 -$30,000
Year 1 $45,000 $5,000 $40,000
Year 2 $45,000 $5,000 $40,000
Year 3 $45,000 $5,000 $40,000
Year 4 $45,000 $5,000 $40,000
Year 4 $48,000 $5,000 $43,000
Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smartphones. Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit. With annual overhead costs and operating expenses amounting to $145,000. Jamie expects a profit margin of 20 percent. This margin is 5 percent larger than that of her largest competitor, Apps. Inc.
a. If Jamie decides to embark on her new venture, What will her accounting cost be during the first year of operation? Her implicit costs? Her opportunity costs?
Accounting costs: $_____
Implicit costs: $_____
Opportunity costs: $_____
b. Suppose that Jamie's estimated selling price is lower than originally projected during the first year. How much revenue would she need in order to earn positive accounting profits? Positive economic profits?
Revenue needed to earn positive accounting profits: $______
Revenue needed to earn positive economic profits:
Answer:
Follows are the solution to the given points:
Explanation:
For point A:
Cost with accounting=The actual manufacturing expenditures or spendings that appear on expensive sports or record of a company= [tex]\$ 145,000[/tex]
[tex]\text{Costs = gross pay} = 50000 \times 4 - 1.2 \times1,45,000 = 26000\\\\{ total \ cost = 120 \% \ of\ 145,000}[/tex]
Cost opportunity=75,000
Total revenue required besides positive accounting benefits=cost of accounting =145000
Income to create positive economic benefits=cost of accounts + implied cost
[tex]= 145000+26000=171000[/tex]
For point B:
Income required to make positive profit in accounts = 145,000 more than the accounting costs
Revenue necessary to earn positive profit = 220,000 more than opportunity cost
Lincoln, Inc., which uses a volume-based cost system, produces cat condos that sell for $140 each. Direct materials cost $22 per unit, and direct labor costs $15 per unit. Manufacturing overhead is applied at a rate of 280% of direct labor cost. Nonmanufacturing costs are $34 per unit. What is the gross profit margin for the cat condos
Answer:
43.57 %
Explanation:
The computation of the gross margin for the cat condos is given below:
Total Manufacturing Cost per unit is
= Direct materials + Direct labor + Manufacturing overhead
= $22 + $15 + ( 280% of $15)
= $79
Now
Gross Profit is
= Selling price per unit - Total Manufacturing Cost per unit
= $140 - $79
= $61
And finally
Gross Profit Margin is
= (Gross Profit ÷ Selling Price ) × 100
= ($61 ÷ $140) × 100
= 43.57 %
Sorter Company purchased equipment for $330,000 on January 2, 2019. The equipment has an estimated service life of 8 years and an estimated residual value of $33,000 . Required: Compute the depreciation expense for 2019 under each of the following methods: Straight-line: $ fill in the blank 1 Sum-of-the-years'-digits: $ fill in the blank 2 Double-declining-balance: $
Answer:
1. Depreciation expense for 2019(Straight-line)= (Cost of the assets - Salvage value) / life of the assets
= ($330000 - $33000)/8
= $37,125
2. Sum-of-the-years'-digits = 1+2+3+4+5+6+7+8 = 36
Depreciation Expense for 2019(Sum-of-the-years'-digits method)
= ($330000 - $33000)*8/36
= $66,000
3. Double-declining-balance depreciation rate = (100/8 years)*2 = 25%
Depreciation Expense for 2019 = 330000*25% = $82,500
The Oxford Company uses a job order cost system and applies factory overhead to jobs on the basis of direct labor cost. During the month of July, the following activities took place in the work-in-process account:
Beginning $15,000
Direct materials 10,000
Direct labor 30,000
Overhead applied 15,000
 Â
At the end of July, only one job (Job #15), was still in process. This job has been charged with $2,000 of direct materials cost.
Required:
Determine the amount of direct labor cost incurred and overhead applied in the ending inventory of work-in-process on July 31.
Answer:
See below
Explanation:
The amount of direct labor cost incurred is computed as;
= $30,000/$70,000 × $2,000
= $857
Overhead applied in ending working in the ending inventory of work in process on July 31
= $15,000/$70,000 × $2,000
= $429
Diaz Company owns a milling machine that cost $126,500 and has accumulated depreciation of $92,700. Prepare the entry to record the disposal of the milling machine on January 3 under each of the following independent situations. The machine needed extensive repairs, and it was not worth repairing. Diaz disposed of the machine, receiving nothing in return. Diaz sold the machine for $15,900 cash. Diaz sold the machine for $33,800 cash. Diaz sold the machine for $41,200 cash.
Answer:
A. Jan 03
Dr Accumulated depreciation—Milling machine $92,700
Dr Loss on disposal of milling machine $33,800
Cr Milling machine $126,500
B .Jan 03
Dr Cash $15,900
Dr Accumulated depreciation—Milling machine $92,700
Dr Loss on sale of milling machine $17,900
Cr Milling machine $126,500
C. Jan 03
Dr Cash $33,800
Dr Accumulated depreciation—Milling machine $92,700
Cr Milling machine $126,500
Explanation:
Preparation of journal entries
A. Jan 03
Dr Accumulated depreciation—Milling machine $92,700
Dr Loss on disposal of milling machine $33,800
($126,500-$92,700)
Cr Milling machine $126,500
B .Jan 03
Dr Cash $15,900
Dr Accumulated depreciation—Milling machine $92,700
Dr Loss on sale of milling machine $17,900
[126,500-($15,900+$92,700)
Cr Milling machine $126,500
C. Jan 03
Dr Cash $33,800
Dr Accumulated depreciation—Milling machine $92,700
Cr Milling machine $126,500
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February:
Fixed Component Variable Component Actual Total
per Month per Job for February
Revenue $276 $35,890
Technician wages $8,600 $8,450
Mobile lab operating expenses $4,600 $34 $9,200
Office expenses $2,800 $3 $3,070
Advertising expenses $1,580 $1,650
Insurance $2,890 $2,890
Miscellaneous expenses $930 $1 $375
The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $4,600 plus $34 per job, and the actual mobile lab operating expenses for February were $9,200. The company expected to work 140 jobs in February, but actually worked 150 jobs.
Required:
Complete the flexible budget performance report showing AirQual Test Corporation’s revenue and spending variances and activity variances for February.
Answer:
AirQual Test Corporation
Flexible Budget:
Fixed Variable Actual Flexible Variance
Revenue $276 $35,890 $41,400 ($5,510) U
Technician wages $8,600 $8,450 8,600 150 F
Mobile lab operating exp. $4,600 $34 $9,200 9,700 500 F
Office expenses $2,800 $3 $3,070 3,250 180 F
Advertising expenses $1,580 $1,650 1,580 (70) U
Insurance $2,890 $2,890 2,890 0 N/A
Miscellaneous expenses $930 $1 $375 1,080 705 F
Total $10,255 $14,300 $4,045 U
Explanation:
a) Data and Calculations:
Fixed Variable Actual
Revenue $276 $35,890
Technician wages $8,600 $8,450
Mobile lab operating exp. $4,600 $34 $9,200
Office expenses $2,800 $3 $3,070
Advertising expenses $1,580 $1,650
Insurance $2,890 $2,890
Miscellaneous expenses $930 $1 $375
Expected number of jobs to be worked = 140
Actual number of jobs worked = 150
Flexible costs:
Revenue = $276 * 150 = $41,400
Mobile lab operating expense:
Fixed element = $4,600
Variable element = $34 * 150 = $5,100
Total flexible budget = $9,700
Office Expenses:
Fixed element = $2,800
Variable element = $3 * 150 = $450
Total flexible budget = $3,250
Miscellaneous expenses:
Fixed element = $930
Variable element = $1 * 150 = $150
Total flexible budget = $1,080
Spending Variances:
Technician wages $8,600 $8,450 8,600 150 F
Advertising expenses $1,580 $1,650 1,580 (70) U
Insurance $2,890 $2,890 2,890 0 N/A
Spending variances = $80 F
Activity Variances:
Mobile lab operating exp. $4,600 $34 $9,200 9,700 500 F
Office expenses $2,800 $3 $3,070 3,250 180 F
Miscellaneous expenses $930 $1 $375 1,080 705 F
Total activity variances = $1,385 F
The service-profit chain is designed to help managers better understand the key linkages in a service delivery system that drive customer loyalty, revenue growth, and higher profits.
a. True
b. False
Which of the following best illustrates Hofstede's definition of collectivism?
a. Managers at Honest Tea expect that all employees will have an interest and part in environmental sustainability
b. The founder of Honest Tea stresses the importance of equality and opportunity
c. An employee of Honest Tea prefers to work alone and puts him- or herself above others
d. The managers of Honest Tea prefer tradition over change
e. Employees in Honest Tea have high levels of anxiety about uncertainty
Answer:
a. Managers at Honest Tea expect that all employees will have an interest and part in environmental sustainability
Explanation:
Analyzing the information about Honest Tea, it is possible to understand that sustainability is an issue that has a lot of weight for the company, and all its processes are managed in an environmentally responsible manner. Therefore, it is correct to say that Honest Tea managers expect all employees to be interested and participate in environmental sustainability, as this is a value that identifies and positions the company in the market, and it is essential that this value is shared by all employees.
Environmental management is a form of management that provides significant advantages to an organization, as it standardizes procedures and policies to reduce environmental impacts, the company operates with a focus on continuous improvement that reduces costs, waste, makes work most satisfactory and sustainability as a shared value.
Marvin had the following transactions: Salary $50,000 Interest on City of Chicago bonds $250 Bank loan (proceed to buy personal auto) $10,000 Alimony payment to ex-wife (Divorce was finalized in 2018) $12,000 Child support payment $6,000 Gift received from aunt $20,000 Marvin's AGI is: A. $32,000 B. $38,000 C. $44,000 D. $56,000 E. $64,000
Answer:
B. $38,000
Explanation:
Calculation for Marvin's AGI
Salary $50,000
Less Alimony payment to ex-wife $12,000
AIG $38,000
($50,000-$12,000)
Therefore Marvin's AGI is $38,000
If Cho's boss is interested in a graphical representation of the relationship between the price and quantity of televisions demanded, you would advise your coworker to construct_____________ using the data provided. However, if Cho's boss is more interested in the detailed numbers used to construct this visual representation, you would instead advise your coworker that_________ would be more appropriate.
Answer:
supply curve
supply schedule
Explanation:
From the question, we are given an instance that If Cho's boss is interested in a graphical representation of the relationship between the price and quantity of televisions demanded, i would advise your coworker to construct supply curve using the data provided. However, if Cho's boss is more interested in the detailed numbers used to construct this visual representation, you would instead advise your coworker that supply schedule would be more appropriate.
The supply curve can be regarded as
graphic representation that gives the
correlation between quantity supplied and cost of a good for a particular period of time.the left vertical axis con rain the price, the horizontal axis contains the quantity supplied .
Supply schedule can be regarded as table that gives the relationship between quantity supplied and the
price of a good
The County legislature approved its 2020 budget. Revenues from property taxes are estimated to be $800,000. The assessed value of all the property in the county is $40 million. The County has received certificates for property tax exemption of consisting of $3 million for homestead exemptions, $1.3 million for veterans, $700,000 for old age, and $5 million for nonprofits. In addition, the County believes all property taxes will be collectible. What property tax rate per $1,000 of net assessed value must the County charge to collect sufficient property taxes to meet its $800,000 estimate?
A. $16 for each $1,000 of net assessed value.
B. $2.67 for each $1,000 of net assessed value
C. $20 for $1,000 of net assessed value
D. $26.67 for each $1,000 of net assessed value
Answer:
The County
The property tax rate per $1,000 of net assessed value that the County must charge to collect sufficient property taxes to meet its $800,000 estimate is:
D. $26.67 for each $1,000 of net assessed value.
Explanation:
a) Data and Calculations:
Estimated Revenues from Property Taxes = $800,000
Assessed value of property in the county = $40 million
Exempted property in the county:
Homestead = $3.0 million
Veterans = 1.3 million
Old age = 0.7 million
Nonprofits = 5.0 million
Total exemptions = $10 million
Therefore, net assessed value = $30 million ($40 - 10 million)
Chargeable Rate per $1,000 = $800,000/$30,000,000 * 1,000 = $26.67
The first step in the decision-making process is to a. define your wants and needs b. identify your choices c. make a decision d. gather information Please select the best answer from the choices provided СА OB C Save and Exit Mark this and return
the first step is identify your choices
Wildhorse Locomotive Corporation purchased for $604,000 a 40% interest in Lopez Railways, Inc. This investment enables Wildhorse Locomotive to exert significant influence over Lopez Railways. During the year, Lopez Railways earned net income of $159,000 and paid dividends of $27,000. Prepare ZaneLocomotive’s journal entries related to this investment.
Answer:
Dr Equity Investments $604,000
Cr Cash $604,000
Dr Equity Investments $63,600
Cr Investment Income $63,600
Dr Cash $10,800
Cr Equity Investments $10,800
Explanation:
Preparation of ZaneLocomotive’s journal entries related to this investment.
Dr Equity Investments $604,000
Cr Cash $604,000
(Being to record Investment)
Dr Equity Investments $63,600
Cr Investment Income $63,600
(40% × $159,000)
(Being to record share in net income)
Dr Cash $10,800
Cr Equity Investments $10,800
(40% × $27,000)
(Being to record shares in dividend)
M Corp. has an employee benefit plan for compensated absences that gives each employee 15 paid vacation days. Vacation days can be carried over indefinitely. Employees can elect to receive payment in lieu of vacation days. At December 31, 2021, M's unadjusted balance of liability for compensated absences was $35,400. M estimated that there were 200 total vacation days available at December 31, 2021. M's employees earn an average of $177 per day. After recording any necessary adjustment, in its December 31, 2021, balance sheet, what amount of liability for compensated absences is M required to report
Answer:
$35,400
Explanation:
Calculation for what amount of liability for compensated absences is M required to report
Using this formula
Liability for compensated absences=Total vacation days available at December 31, 2021 *Average wage per day
Let plug in the formula
Liability for compensated absences=200*$177 per day
Liability for compensated absences=$35,400
Therefore the Liability for compensated absences at December 31, 2021 will be $35,400
In the discussion forum, you are expected to participate often and engage in deep levels of discourse. Please post your initial response by Sunday evening and continue to participate throughout the unit. You are required to post an initial response to the question/issue presented in the Forum and then respond to at least 3 of your classmates’ initial posts. You should also respond to anyone who has responded to you.
The full "accounting cycle" which culminates in closing the books and producing financial statements. Discuss the differences between Permanent "real" accounts and Temporary ¨nominal¨ accounts:
1. What type of information is contained in nominal accounts, and what type of information is contained in real accounts?
2. Which financial statement contains the information from nominal accounts and which contains the information from real accounts?
3. Provide an example of real accounts and an example of nominal accounts.
Answer:
The Accounting Cycle: Permanent and Temporary Accounts
1. The information that is contained in the nominal accounts is revenues and expenses, incomes, and losses. The information that is contained in the real accounts is assets, liabilities, and equity.
2. Income Statement and Statement of Retained Earnings contain the information from nominal accounts. Balance Sheet contains information from real accounts.
3. An example of a real account is Accounts Receivable. An example of a nominal account is Service Revenue.
Explanation:
The differences between real or permanent accounts and nominal or temporary accounts are that permanent accounts include assets, liabilities, and equity accounts while temporary accounts include revenues and expenses. Permanent accounts are not closed to a financial period but rolled over from one accounting period to the next. Temporary accounts, on the other hand, are closed in the financial period. They do not roll over to the next period because their net effects are closed to a permanent account (equity).
1) Consider the single factor APT. Portfolio A has a beta of 1.7 and an expected return of 19%. Portfolio B has a beta of .6 and an expected return of 15%. The risk-free rate of return is 11%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio __________ and a long position in portfolio
Answer:
A, B.
Explanation:
E(r) = Rf + beta (Risk premium on factor)
PORTFOLIO A
19% = 11% + 1.7(RP)
19% - 11% = 1.7(RP)
(RP) = 0.08/1.7
(RP) = 0.047059
(RP) = 4.706%
PORTFOLIO B
15% = 11% + 0.6(RP)
15% - 11% = 0.6(RP)
(RP) = 0.04/0.6
(RP) = 0.06667
(RP) = 6.667%
As risk premium is lower in case of portfolio A, the correct strategy is Short Position in Portfolio A and Long Position in Portfolio B
The account balances of Paradise Travel Service for the year ended May 31, 20Y6, follow:
Fees earned $900,000
Office expense 300,000
Miscellaneous expense 15,000
Wages expense 450,000
Accounts payable 18,000
Accounts receivable 38,000
Cash 52,000
Common Stock 100,000
Land 450,000
Supplies 3,000
$10,000 of dividends were paid during the year. Retained earnings as of June 1, 20Y5, were $300,000. Prepare a balance sheet as of May 31, 20Y6. When entering assets, enter them in order of liquidity.
Answer:
Paradise Travel Service
Balance Sheet as of May 31, 20Y6:
Assets:
Cash $52,000
Accounts receivable 38,000
Supplies 3,000
Land 450,000
Total assets $543,000
Liabilities and Equity:
Accounts payable 18,000
Common Stock 100,000
Retained Earnings 425,000
Total liabilities and
equity $543,000
Explanation:
a) Data and Calculations:
Paradise Travel Service
Income Statement for the year ended May 31, 20Y6:
Fees earned $900,000
Office expense 300,000
Miscellaneous expense 15,000
Wages expense 450,000
Total expenses 765,000
Net Income $135,000
Statement of Retained Earnings for the year ended May 31, 20Y6:
Retained Earnings, June 1, 20Y5 $300,000
Net Income 135,000
Dividends 10,000
Retained Earnings, May 31, 20Y6 $425,000
b) The balance sheet shows the balances of assets, liabilities and equity at the end of an accounting period. It derives its name from the accounting equation, which states that assets = liabilities + equity. This equation implies that the two sides always balance each other.
Skysong Inc., a provider of consulting services, was founded on October 1, 2022. At the end of the first month of operations, the company decided to prepare an income statement, retained earnings statement, and balance sheet using the following information. Accounts payable $ 3,700 Supplies $ 2,650 Interest expense 350 Supplies expense 360 Equipment (net) 48,000 Depreciation expense 260 Salaries and wages expense 2,800 Service revenue 19,540 Bonds payable 21,800 Salaries and wages payable 590 Unearned service revenue 4,190 Common stock 9,900 Accounts receivable 1,450 Interest payable 150 Cash 4,000 Using the information, answer the following questions.
Required:
a. Prepare an income statement for the month of October 2022.
b. Prepare a retained earnings statement for the month of October 2022.
c. Prepare a balance sheet as of October 31, 2022.
Answer:
a. Income Statement for the month of October 2022
Revenue:
Service revenue $19,540
Expenses:
Salaries and Wages $2,800
Supplies Expenses $360
Depreciation Expenses $260
Interest Expenses $350
Total Expenses $3,770
Net Income $15,770
b. Retained earnings statement for the month of October 2022
Retained Earnings, October 1, 2020 $0
Add: Net Income $15,770
Retained Earnings, October 31, 2020 $15,770
Match each of the following terms A through F with the appropriate definitions 1 through 6.
A. Maker of a note
B. Interest
C. Promissory note
D. Payee of a note
E. Principal of a note
F. Dishonoring a note _____
1. A written promise to pay a specified amount either on demand or at a definite future date. _____
2. The cost of borrowing money for a borrower, alternatively the profit from, lending money for a lender. _____
3. One who signs a note and promises to pay it at maturity. _____
4. The one to whom the promissory note is made payable. _____
5. Refers to a note maker's inability or refusal to pay the note at maturity. _____
6. The amount that the signer of a note agrees to pay back when the note matures, not including interest. Defining promissory notes.
Solution :
A. Maker of a note: 3. It is the person who signs the note and promises to pay.
The maker puts his signature and promises to pay the bearer the amount of the value of the note.
B. Interest: 2. It is the cost of borrowing money and profit for lender.
It is the extra money that the borrower pays to the lender. It is like an income to the lender.
C. Promissory note: 1. It is a promise to pay the signed sum.
It is a note that promises to pay the amount of the value.
D. Payee of a note: 5. It is the person to which the note is payable.
Payee is the individual who is the owner of the note.
E. Principal of a note: E. It is the amount signed to be paid back excluding interest.
It is the basic amount signed to be paid to the bearer.
F. Dishonoring a note: 5. It is inability to pay the signed sum.
Dishonoring is refusal to pay or the inability to pay the value for the signed amount.
In Year 1, Lee Inc. billed its customers $62,000 for services performed. The company collected $51,000 of the amount billed. Lee incurred $39,000 of other operating expenses on account. Lee paid $31,000 of the accounts payable. Lee acquired $40,000 cash from the issue of common stock. The company invested $21,000 cash in the purchase of land. Required (Hint: Identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation before attempting to answer the questions.) Use the preceding information to answer the following questions: What amount of revenue will Lee report on the Year 1 income statement
Answer and Explanation:
LEE INC.
Effect of events on the general ledger accounts
Event Cash Account land Account Common stock Retained
receivable Payable Earnings
Sales
on account 62,000 62,000
collected 51,000 -51,000
Expenses 39,000 -39,000
Account
Payable -31,000 -31,000
Issue of stock 40,000 40,000
Purchase land -21,000 21,000
Totals 39,000 11,000 21,000 8,000 40,000 23,000
The computation of the amount of revenue recognized would be equivalent to the service performed i.e. $62,000
Which of the following statements are true oflong-term investments?
a. They can include bonds and stocks not intended to be sold in the near future.
b. They can be considered cash equivalents.
c. They can include assets not used in operations, such as investments in land.
d. They generally include investments that will mature in 3 to 12 months.
e. They are reported with noncurrent assets on the balance sheet.
f. They are always easily sold and therefore qualify as being marketable.
Answer:
a. They can include bonds and stocks not intended to be sold in the near future.
c. They can include assets not used in operations, such as investments in land.
e. They are reported with noncurrent assets on the balance sheet.
Explanation:
Long term investment or assets are those that are typically held in a company's balance sheet for many years. They can include assets such as land, equipment like machinery, buildings and vehicles.
They also include sticks and bonds that won't be used in the short term.
So long term investment are not cash equivalents because cash can be used in the short term.
Also it cannot be used within 3 - 12 months.
They are not easily sold as they sold so they are not considered marketable asset in the short run.
Long term investment is considered to be a non current asset as they last longer than a year on the balance sheet.
M. K. Gallant is president of Kranbrack Corporation, a company whose stock is traded on a national exchange. In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the company’s earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and Gallant concluded within two weeks of the end of the fiscal year that it would be impossible to report an increase in earnings as large as predicted unless some drastic action was taken. Accordingly, Gallant has ordered that wherever possible, expenditures should be postponed to the new year—including canceling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-year advertising and travel. Additionally, Gallant ordered the company’s controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product costs. The company is expected to have substantial inventories at the end of the year.
1. Why would reclassifying period costs as product costs increase this period’s reported earnings?
2. Do you believe Gallant’s actions are ethical? Why or why not?
A common error made when solving a future value of an annuity problem is: Multiple Choice Using factor tables to help solve the problem. Dividing the annual deposit by the number of years before calculating the problem. Using a financial calculator to help solve the problem. Multiplying the number of years and the interest rate before calculating the problem. Multiplying the annual deposit and the number of years before calculating the problem.
Answer:
Multiplying the annual deposit and the number of years before calculating the problem.
Explanation:
An annuity can be defined as a sequence of payment that is typically made at equal intervals i.e at specific period of time.
Basically, annuity can be calculated using the compound interest formula. It is given by the mathematical expression;
[tex] A = P(1 + \frac{r}{n})^{nt}[/tex]
Where;
A is the future value.
P is the principal or starting amount.
r is annual interest rate.
n is the number of times the interest is compounded in a year.
t is the number of years for the compound interest.
Additionally, the time period between each payment is called payment period.
The term of an annuity refers to the time from the beginning of the first payment made by an individual to the end of the last payment period.
A common error made when solving a future value of an annuity problem is multiplying the annual deposit and the number of years before calculating the problem.
1. A manager uses the following equation to predict monthly receipts: Y=450+10t time in weeks and y = receipts.) What is the forecast for July 14th if t=4 is the fourth week in January and t = 6 is February 14th of the same year (assume there are 4 weeks in each month)?
a. 690
b. 710
c. 730
d. 750
2. A major reason that decision making is often not such a rational process is that there are: Suppose we have H0:µ1= µ2 versus HA: µ1 ≠ µ2, with level of significance of α =.05 and critical values of zα/2 = ± 1.96, and the computed Test Statistics value of Z = -1.07. What is our decision?
Answer:
1. 690
2. Do not reject the null hypothesis.
Explanation:
1. Month t
At the end of Feb 6
March 4
April 4
May 4
June 2
14th of July 2
Total 24
Therefore on 14th July, t = 24
Forecast: Y = 450+10t = 450 + 10*24 = 450+240 = 690
2. Options are "a. Reject the null hypothesis. b. Do not reject the null hypothesis. c. Take a larger sample. d. Reserve judgment"
In general, if test statistic is more extreme than the critical values at given level of significance then we reject the null hypothesis otherwise we do not reject the null hypothesis.
Here, test statistic for the given two tailed test is Z = -1.07 and critical value at level of significance α = 0.5 is ± 1.96 . Since -1.96<Z<1.96, we can say that we do not reject Null Hypothesis as the test statistic is not extreme than the critical value at given level of significance.
Manufacturing overhead for the month was underapplied by $6,000. The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts. The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for January would include the following:
Work In Process Finished Goods Cost of Goods Sold Total
Direct materials $10,670 $12,000 $81,120 $103,790
Direct labor 11,630 15,000 101,400 128,030
Manufacturing
overhead applied 9,680 9,680 68,640 88,000
Total $31,980 $36,680 $251,160 $319,820
Manufacturing overhead for the month was underapplied by $6,000.
The Corporation allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the manufacturing overhead applied during the month in those accounts.
The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for May would include the following:
a. credit to Work in Process of $31,980.
b. debit to Work in Process of $660.
c. credit to Work in Process of $660.
d. debit to Work in Process of $31,980.
Answer:
b. debit to Work in Process of $660.
Explanation:
Particulars Work in Finished Cost of Goods Sold Total
Process Goods
Manufacturing
overhead
applied during
the month 9680 9680 68640 88000
Percentage of total 11.0% 11.0% 78.0% 100.0%
Allocation of under-applied
manufacturing overhead 660 660 4680 6000
The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances:
Account Title Debits Credits
Cash 30,000
Accounts receivable 15,000
Equipment 20,000
Accumulated depreciation 6,000
Salaries payable 9,000
Common stock 40,500
Retained earnings 9,500
Total 65,000 65,000
The following is a summary of the transactions for the year:
Sales of services, $100,000, of which $30,000 was on credit.
Collected on accounts receivable, $27,300.
Issued shares of common stock in exchange for $10,000 in cash.
Paid salaries, $50,000 (of which $9,000 was for salaries payable).
Paid miscellaneous expenses, $24,000.
Purchased equipment for $15,000 in cash.
Paid $2,500 in cash dividends to shareholders.
Accrued salaries at year-end amounted to $1,000.
Depreciation for the year on the equipment is $2,000.
Required:
2., 5, & 8. Prepare the summary, adjusting and closing entries for each of the transactions listed.
3. Post the transactions, adjusting and closing entries into the appropriate t-accounts.
4. Prepare an unadjusted trial balance.
6. Prepare an adjusted trial balance.
7-a. Prepare an income statement for 2018.
7-b. Prepare a balance sheet as of December 31, 2018.
9. Prepare a post-closing trial balance.
Answer:
Karlin Company
T-Accounts
Cash
Account Title Debits Credits
Beginning balance 30,000
Service Revenue 70,000
Accounts receivable 27,300
Common Stock 10,000
Salaries payable 9,000
Salaries expense 41,000
Miscellaneous expenses 24,000
Equipment 15,000
Dividends 2,500
Balance 45,800
Totals 137,300 137,300
Accounts receivable
Account Title Debits Credits
Beginning balance 15,000
Service Revenue 30,000
Cash 27,300
Balance 17,700
Totals 45,000 45,000
Equipment
Account Title Debits Credits
Beginning balance 20,000
Cash 15,000
Balance 35,000
Totals 35,000 35,000
Accumulated depreciation
Account Title Debits Credits
Beginning balance 6,000
Depreciation expense 2,000
Balance 8,000
Totals 8,000 8,000
Salaries payable
Account Title Debits Credits
Beginning balance 9,000
Cash 9,000
Salaries Expense 1,000
Balance 1,000
Totals 10,000 10,000
Common stock
Account Title Debits Credits
Beginning balance 40,500
Cash 10,000
Balance 50,500
Totals 50,500 50,500
Retained earnings
Account Title Debits Credits
Beginning balance 9,500
Dividend
Account Title Debits Credits
Cash 2,500
Service Revenue
Account Title Debits Credits
Cash 70,000
Accounts Receivable 30,000
Balance 100,000
Totals 100,000 100,000
Salaries Expense
Account Title Debits Credits
Cash 41,000
Salaries payable 1,000
Balance 42,000
Totals 42,000 42,000
Miscellaneous Expense
Account Title Debits Credits
Cash 24,000
Depreciation Expense
Account Title Debits Credits
Accumulated depr 2,000
Unadjusted Trial Balance as of December 31, 2018:Account Title Debits Credits
Cash $45,800
Accounts receivable 17,700
Equipment 35,000
Accumulated depreciation $6,000
Common stock 50,500
Retained earnings 9,500
Dividends 2,500
Service Revenue 100,000
Salaries expense 41,000
Miscellaneous exp. 24,000
Totals $166,000 $166,000
Adjusted Trial Balance as of December 31, 2018:Account Title Debits Credits
Cash $45,800
Accounts receivable 17,700
Equipment 35,000
Accumulated depreciation $8,000
Salaries payable 1,000
Common stock 50,500
Retained earnings 9,500
Dividends 2,500
Service Revenue 100,000
Salaries expense 42,000
Miscellaneous exp. 24,000
Depreciation exp. 2,000
Totals $169,000 $169,000
Income Statement for the year ended December 31, 2018:Service Revenue 100,000
Salaries expense 42,000
Miscellaneous exp. 24,000
Depreciation exp. 2,000 68,000
Net Income 32,000
Retained earnings 1/1/2018 9,500
Dividends 2,500
Retained earnings 12/31/2018 39,000
Balance Sheet as of December 31, 2018:Assets
Cash $45,800
Accounts receivable 17,700
Equipment 35,000
Acc. depreciation 8,000 27,000
Total assets $90,500
Liabilities + Equity:
Salaries payable 1,000
Common stock 50,500
Retained earnings 39,000
Total liabilities + equity $90,500
Post Closing Trial BalanceAccount Title Debits Credits
Cash $45,800
Accounts receivable 17,700
Equipment 35,000
Acc. depreciation $8,000
Salaries payable 1,000
Common stock 50,500
Retained earnings 39,000
Totals $98,500 $98,500
Explanation:
a) Data and Calculations:
Trial Balance as of January 1, 2018:
Account Title Debits Credits
Cash 30,000
Accounts receivable 15,000
Equipment 20,000
Accumulated depreciation $6,000
Salaries payable 9,000
Common stock 40,500
Retained earnings 9,500
Total 65,000 65,000
By convention, a swap buyer on an interest rate swap agrees to act as the dealer in the swap agreement. hold both principal and interest to contract maturity. periodically pay a fixed rate of interest and receive a floating rate of interest. back both sides of the swap agreement. periodically pay a floating rate of interest and receive a fixed rate of interest.
Answer:
periodically pay a fixed rate of interest and receive a floating rate of interest.
Explanation:
The interest rate (rate of return) can be defined as the percentage of interest or dividends earned on money that is invested.
In Financial accounting, a return refers to the amount of profit generated by an investor on an investment over a specific period of time.
Basically, the interest rate which is typically expressed as a percentage of the initial costs of an investment can either be a gain or a loss on an investment. Therefore, a positive rate of return on an investment over a specific period of time, simply means that an investor is making a profit (gains) while a negative rate of return on an investment over a specific period of time, indicates that the investor is running at a loss.
By convention, a swap buyer on an interest rate swap agrees to periodically pay a fixed rate of interest and receive a floating rate of interest.
A $200,000 loan amortized over 13 years at an interest rate of 10% per year requires payments of $21,215.85 to completely remove the loan when interest is charged on the unrecovered balance of the principal. If interest is charged on the original principal instead of the unrecovered balance, what is the loan balance after 13 years provided the same $21,215.85 payments are made each year
Answer:
Loan amount = $184,193.95
Explanation:
Interest will remain same each year. Interest per year = 200,000*10% = $20,000
Installment $21,215.85
Less: Interest $20,000
Payment to Principal $1,215.85
Total principal repaid in 13 years = $1,215.85 * 13 years = $15,806.05
So, the principal left = $200,000 - $15,806.05 = $184,193.95
Jake Fleming sells graphic card update kits for computers. Jake purchases these kits for $20 and sells about 250 kits a year. Each time Jake places an order, it costs him $25 to cover shipping and paperwork. Jake figures that the cost of holding an update kit in inventory is about $3.50 per kit per year. What is the economic order quantity
Answer:
60 Kits
Explanation:
Cost price (C) = $20/Kit
Yearly se (D) = 250 kit/year
Shipping cost / Ordering cost (Co) = $25
Holding cost (Ch) = $3.5/Kit-year
Economic order quantity = √2.D.Co / Ch
Economic order quantity = √2*250*25/3.5
Economic order quantity = √12500/3.5
Economic order quantity = √3571.4285
Economic order quantity = 59.7614305
Economic order quantity = 60 Kits