Answer:
B. L3 pack is overcosted by $5,850
Explanation:
The statements that is true of Hebar's setup costs under traditional costing
Using this formula
Hebar's setup costs =Setup cost allocated using direct labor hours - Setup cost allocated using setup-hours
Where ,
Setup cost allocated using direct labor hours =$19,250
Setup cost allocated using setup-hours =$13,400
Let plug in the formula
Hebar's setup costs=$19,250 − $13,400 = $5,850
Therefore the statements that is true of Hebar's setup costs under traditional costing will be $5,850
Joe Dumars Company has outstanding 40,000 shares of $5 par common stock, which had been issued at $30 per share. Joe Dumars then entered into the following transactions.
1. Purchased 5,000 treasury shares at $45 per share.
2. Resold 2,000 of the treasury shares at $49 per share.
3. Resold 500 of the treasury shares at $40 per share.
Indicate the effect each of the three transactions has, assuming Joe Dumars Company uses the cost method.
Answer:
Transaction 1
Assets - Decrease by $225,000
Cash was used to purchase the shares at = 5,000 * 45 = $225,000
Liabilities - No effect
Stockholders' equity - Decrease by $225,000
Treasury shares reduce the amount held by stockholders.
Paid In Capital - No effect
Retained Earnings - No Effect
Net Income - No Effect
Transaction 2
Assets - Increase by $98,000
The shares were sold for at = 2,000 * 49 = $98,000
Liabilities - No effect
Stockholders' equity - Increase by $90,000
= 2,000 * 45 = $90,000
Treasury shares sold increases the amount held by stockholders. As we are using the Cost method, this will be recorded at cost.
Paid In Capital - Increase by $8,000
Using the cost method, when stock is sold for more than it was bought, record the cost in the stock account and credit the remainder to this account.
Retained Earnings - No Effect
Net Income - No Effect
Transaction 3
Assets - Increase by $20,000
The shares were sold for at = 500 * 40 = $20,000
Liabilities - No effect
Stockholders' equity - Increase by $22,500
= 500 * 45 = $22,500
Treasury shares sold increases the amount held by stockholders. As we are using the Cost method, this will be recorded at cost.
Paid In Capital - Decrease by $2,500
Using the cost method, when stock is sold for less than it was bought, record the cost in the stock account and debit the remainder to this account to indicate a decrease.
Retained Earnings - No Effect
Net Income - No Effect
Bonds payable—record issuance and discount amortization Coley Co. issued 515 million face amount of 9%, 10-year bonds on June 1, 2013. The bonds pay interest on an annual basis on May 31 each year.
Required:
a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.
b. Independent of your answer to part a, assume that the proceeds were 514,820,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds.
c. Calculate the interest expense that Coley Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2013, assuming that the discount of 5180,000 is amortized on a straight-line basis.
Answer:
a. Assume that the market interest rates were slightly higher than 9% when the bonds were sold. Would the proceeds from the bond issue have been more than, less than, or equal to the face amount? Explain.
If the market interest is higher than the coupon interest, then the bonds will sell at a discount. This means that the amount of cash received will be less than the $515 million face valueb. Independent of your answer to part a, assume that the proceeds were 514,820,000. Use the horizontal model (or write the journal entry) to show the effect of issuing the bonds.
Dr Cash 514,820,000Dr Discount on bonds payable 180,000 Cr Bonds payable 515,000,000c. Calculate the interest expense that Coley Co. will show with respect to these bonds in its income statement for the fiscal year ended September 30, 2013, assuming that the discount of 5180,000 is amortized on a straight-line basis.
amortization of bond discount = $180,000 / 10 = $18,000 per annual coupon payment
4 months from June 1 to September 30, so discount amortization = $18,000 x 4/12 = $6,000
the journal entry to adjust accrued interest expense:
September 30, 2013, accrued interest expense:
Dr Interest expense 15,456,000
Cr Interest payable 15,450,000
Cr Discount on bonds payable 6,000
Mr. White contracts with his wife Ms. White to watch their kids, Joe and Jimmy, one night for $50. What is the status of the contract between Mr. White and Ms. White?
Answer:
There is no any form of contract between Mr. Smith and Ms. White
Explanation:
Based on the information given there is no contract between Mr. Smith and Ms. White reason been that Ms. White gave inadequate consideration .
Based on this inadequate consideration is not void because it can tend to make a contract between two parties unenforceable because of lack procedure defect when bargaining between two parties .
Lok Co. reports net sales of $5,856,480 for 2016 and $8,679,690 for 2017. End-of-year balances for total assets are 2015, $1,686,000; 2016, $1,800,000; and 2017, $1,982,000. (a) Compute Lok's total asset turnover for 2016 and 2017.
Answer:
2016 = $3.36
2017 = $4.59
Explanation:
The solution of total assets turnover is shown below:-
Particulars 2016 2017
Total assets in the beginning $1,686,000 $1,800,000
Total assets at the end $1,800,000 $1,982,000
Average assets $1,743,000 $1,891,000
(Assets in the beginning + Assets at end) ÷ 2
Sales revenue $5,856,480 $8,679,690
Total assets turnover $3.36 $4.59
(Sales revenue ÷ Average Total assets)
Listed below are five procedures followed by Eikenberry Company.
1. Several individuals operate the cash register using the same register drawer.
2 .A monthly bank reconciliation is prepared by someone who has no other cash responsibilities.
3. Joe Cockrell writes checks and also records cash payment journal entries.
4 .One individual orders inventory, while a different individual authorizes payments.
5 .Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording.
Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated.
Procedure IC Good or Weak Related Internal Control Principle
1.
2.
3.
4.
5.
Answer:
1. Several individuals operate the cash register using the same register drawer. Weak Internal Control. Establishment of Responsibility Internal control violated.
Having many individuals have access to the cash register can lead to theft. Establishment of Responsibility is an internal control that calls for the minimal amount of people being able to do one task. This way issues can be traced faster.
2 .A monthly bank reconciliation is prepared by someone who has no other cash responsibilities. Good Internal Control. Independent Internal Verification control followed.
Independent Verification occurs when a person who is an employee of a company but not related to a task, audits that task to find out if any irregularities are present. It ensures unbiased review.
3. Joe Cockrell writes checks and also records cash payment journal entries. Weak Internal Control. Segregation of Duties Internal control violated.
Segregation of duty calls for the division of a job process into tasks that different people are to accomplish especially in relation to cash. It can help avoid fraud because people will not be able to approve payments for themselves which is what Joe Cockrell can do in this scenario. Joe can withdraw and decide not to record it.
4 .One individual orders inventory, while a different individual authorizes payments. Good Internal Control. Segregation of Duties Internal control followed.
Segregation of duty calls for the division of a job process into tasks that different people are to accomplish especially in relation to cash. By having one individual order inventory and the other authorizing payments, fraud can be better avoided.
5 .Unnumbered sales invoices from credit sales are forwarded to the accounting department every four weeks for recording. Weak Internal Control. Documentation Procedures Internal control violated.
Documentation procedures in a company ensure that the paper trail is efficiently recorded so that transactions can be followed up speedily. By sending unnumbered sales invoices to the Accounting department as well as taking so long to do so, the company is running an inefficient documentation process that will make tracking transactions more difficult.
Epic Company earned net income of $784,000 this year. The number of common shares outstanding during the entire year was 420,000, and preferred shareholders received a $28,000 cash dividend. Compute Epic company's basic earning per share.
Answer:
The answer is $1.8/share
Explanation:
Basic Earnings Per Share (EPS)= (Net income - preferred shars) ÷ weighted number of outstanding shares
Net income - $784,000
Preferred shares - $28,000
Weighted number of outstanding shares - 420,000 shares
($784,000 - $28,000) ÷ 420,000 shares
= $756,000 ÷ 420,000 shares
= $1.8 per share.
This means that each shareholder has $1.8 per share from the net income of $784,000
Saint Nick Enterprises has 17,500 shares of common stock outstanding at a price of $69 per share. The company has two bond issues outstanding. The first issue has 7 years to maturity, a par value of $1,000 per bond, and sells for 101.5 percent of par. The second issue matures in 21 years, has a par value of $2,000 per bond, and sells for 106.5 percent of par. The total face value of the first issue is $250,000, while the total face value of the second issue is $350,000. What is the capital structure weight of debt
Answer:
total weight of debt = 0.343 or 34.3%
Explanation:
stock's market value = 17,500 x $69 = $1,207,500
bond₁'s market value = $250,000 x 101.5% = $256,750
bond₂'s market value = $350,000 x 106.5% = $372,750
total market value of the firm = $1,837,000
weighted capital structure:
market value weight
stocks $1,207,500 0.657
bond₁ $256,750 0.140
bond₂ $372,750 0.203
total $1,837,000 1
total weight of debt = 0.343 or 34.3%
When using the equity method, receipt of cash dividends increases the carrying (book) value of an investment in equity securities.
A. True
B. False
1. Suppose the Kenyan shilling (KS) is currently traded at KS 1.4/$.The Ethiopian Birr (EB) is traded at E B1.39/$.Ignoring transaction costs: A. Determine the KS/EB exchange rate consistent with these direct quotations
Answer:
The answer is KS 1.01/EB.
Explanation:
This is an example of a cross rate.
Cross rate refers to an exchange rate between two currencies that is calculated based on the exchange rate of each of the two currencies to a third currency.
For this question, the cross rate KS/EB will be estimated by reference the US dollar which is third currency. This can be calculated by simply dividing the KS 1.4/$ by the E B1.39/$ as follows:
KS/EB = 1.4 / 1.39 = 1.01
That is, the answer is KS 1.01/EB.
Cooley Company's stock has a beta of 1.40, the risk-free rate is 25%, and the market risk premium is 5.50%. What is the firm's required rate of return
Answer: 12.2%
Explanation:
Given the variables available, the required rate of return can be computed using the Capital Asset Pricing Model with the formula;
Required Return = Risk-free rate + beta ( Market risk premium)
Required return = 4.25% + 1.4 * 5.5%
Required return = 4.25% + 7.7%
Required return = 12.2%
Note; The actual question says the Risk-free rate is 4.25%.
Your boss asks you to settle a negotiation between yourself and a co-worker. In order to improve your own bargaining position, you should encourage your boss to:
Answer:
give only my coworker an incentive to reach an agreement.
Explanation:
One of the ways to improving my bargaining position before negotiation as in the above scenario is that I would encourage my boss to give only my coworker an incentive to reach an agreement so as to make the whole process seamless. There are several reasons why parties engage in negotiation; one of which is to reach an agreement in order to avoid dispute or settle disagreement.
By allowing incentives to be given to my coworker alone in order to reach an agreement, it shows that I am willing to compromise hence improve my bargaining position and strengthen my negotiation skill. It means that I am willing to sacrifice my own term and it must be noted that without compromise by either of the parties in a negotiation, it can be nearly impossible to reach an agreement.
Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation:________.
Answer:
Can be fined upto an amount of $1,000
Explanation:
The first code violation with respect to replacement by the insurance agent can result in fine upto an amount of $1000.
The following data are the actual results for Marvelous Marshmallow Company for August:
Actual output 8,000 cases
Actual variable overhead $ 427,000
Actual fixed overhead $ 149,000
Actual machine time 33,400 machine hours
Standard cost and budget information for Marvelous Marshmallow Company follows:
Standard variable-overhead rate $ 12.00 per machine hour
Standard quantity of machine hours 4 hours per case of marshmallows
Budgeted fixed overhead $ 144,000 per month
Budgeted output 12,000 cases per month
Required:
Compute the following variances:
a Variable-overhead spending variance
b. Variable-overhead efficiencv variance
c. Fixed-overhead budget variance
d. Fixed-overhead volume variance
Answer:
a. $26,200 Unfavorable
b. $16,800 Unfavorable
c. $ 5,000 Unfavorable
d. $48,000 Unfavorable
Explanation:
a Variable-overhead spending variance
Variable-overhead spending variance = Budgeted Variable overheads at actual hours worked - Actual variable overheads
= (33,400 × $ 12.00) - $ 427,000
= $400,800 - $ 427,000
= $26,200 Unfavorable
b. Variable-overhead efficiency variance
Variable-overhead efficiency variance = (Actual Output × Standard hour × Standard rate) - (Actual hours × Standard rate per hour)
= (8,000 × 4 × $ 12.00) - (33,400 × $ 12.00)
= $384,000 - $400,800
= $16,800 Unfavorable
c. Fixed-overhead budget variance
Fixed-overhead budget variance = Actual Fixed Overheads - Budgeted Fixed Overheads
= $ 149,000 - $ 144,000
= $ 5,000 Unfavorable
d. Fixed-overhead volume variance
Fixed-overhead volume variance = Fixed overheads at Budgeted Production - Budgeted Fixed Overheads
= ($ 144,000 / 12,000 × 8,000) - $ 144,000
= $96,000 - $144,000
= $48,000 Unfavorable
Suppose you deposit your paycheck, drawn on another bank. The total money supply in the banking system will ___________ because:
a. Assets of your bank would increase by more than the amount withdrawn from the other bank.
b. An increase in the assets of your bank by the amount of your paycheck would simply decrease the assets of another bank by the same amount.
c. Assets of the other bank would decrease by a fraction of the amount deposited at your bank.
Answer:
Option B, An increase in the assets of your bank by the amount of your paycheck would simply decrease the assets of another bank by the same amount, is correct.
Explanation:
The total money supply in the banking system will remain the “same” because it is given that paycheck is drawn from another bank. So, if a person withdraws money from another bank it implies that there is a decrease in money supply in the banking system and when the cheque is deposited in the other bank so again the money supply will increase in the banking system. However, the amount of money supply will remain the same. Therefore, option B is the right answer.
Prepare an income statement under absorption costing. Round all final answers to whole dollars. Sullivan Equipment Company Absorption Costing Income Statement For the Month Ended March 31 Sales $ 653,200 Cost of goods sold: Cost of goods manufactured $ 352,000 Inventory, March 31 38,880 Total cost of goods sold 313,120 Gross profit $ 340,080 Selling and administrative expenses 234,400 Income from operations $ 574,480
Answer:
Income Statement For the Month Ended March 31
Sales $ 653,200
Cost of goods sold:
Cost of goods manufactured $ 352,000
Less Inventory, March 31 ($ 38,880)
Total cost of goods sold ($ 313,120)
Gross profit $ 340,080
Less Expenses :
Selling and administrative expenses ($ 234,400)
Income from operations $ 105,680
Explanation:
The Product cost in absorption costing includes All Manufacturing Costs. All Non-Manufacturing Costs are treated as Period Costs that are Expensed during the period of Operation.
In terms of the global value system, when Kodak shifted manufacturing to China, what position did China then take in the system, relative to the U.S.
Answer: b. Upstream
Explanation:
The Upstream part of a company's value chain is the part closest to the suppliers and the raw materials they supply to the firm while the downstream relates to how the goods are distributed and sold after produced.
As such, the firm's manufacturing plants are closer to its Upstream value chain portion. When Kodak therefore shifted manufacturing to China, it made China more upstream than the United States as China now dealt more with Kodak suppliers and inputs than the US, who were now more downstream as the consumers.
A disadvantage of the centralized organization is that it: lengthens response times by those closest to the market conditions because they must seek approval for their actions. does not encourage responsibility among lower-level managers and rank-and-file employees. discourages lower-level managers and rank-and-file employees from exercising any initiative. diverts authority away from those closest to, and most knowledgeable about, the situation for actions. results in higher-level managers being unaware of actions taken by empowered personnel under their supervision.
Answer:
results in higher-level managers being unaware of actions taken by empowered personnel under their supervision.
Explanation:
Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 37,600 machine-hours. The estimated variable manufacturing overhead was $4.38 per machine-hour and the estimated total fixed manufacturing overhead was $1,026,856. The predetermined overhead rate for the recently completed year was closest to:
Answer:
Predetermined OH rate = $ 31.69 per machine hour
Explanation:
Predetermined Fixed OH rate = Estimated Fixed Overhead / Estimated machine hours = $1,026,856 / 37,600
Predetermined Fixed OH rate = $27.31 per machine hour
Predetermined OH rate = Predetermined Fixed OH rate + Predetermined variable OH rate = $ 27.31 + $ 4.38
Predetermined OH rate = $ 31.69 per machine hour
Four reasons why firms strategically keep dogs in their business portfolio
Answer:
Keeping Dogs in Business Portfolio
Four Reasons:
1. Dogs may be complementing or boosting the sales of other star products. They are good companions.
2. Dogs may be new products. It will take time for them to become star performers. They learn about their environment well, but it takes some time.
3. Dogs may have marginal prices that are better than the marginal cost of new products. As always, most pet owners prefer Dogs to Cats as they are easier to relate with.
4. Dogs have been developed unlike new products that are still undergoing development, which will take some time to go to market. Humans are more accustomed to petting dogs than cats.
Explanation:
Dogs are in one of the quadrants of the BCG Growth-Share Matrix that discusses how an entity's products can be categorized according to their market share. Dogs are always at the center of divestiture. But, some entities still find it difficult to let go of their cherished and sensitive companions due to the reasons enumerated above.
At the beginning of year 1, Looby Corp. purchases equipment for $100,000. The equipment has a residual value of $20,000 and an expected useful life of 10 years. What is accumulated depreciation at the end of year 2 using straight-line depreciation
Answer:
Accumulated Depreciation at the end of year = $16,000
Explanation:
Under the straight line method of depreciation, the cost of an asset less the salvage value is spread equally over the expected useful life.
An equal amount is charged as annual depreciation over the life of the asset. The annual depreciation is calculated as follows:
Annual depreciation:
= (cost of assets - salvage value)/ Estimated useful life
Cost - 100,000
Residual value = 20,000
Estimated useful life = 10 years
Annual depreciation = (100,000- 20,000)/10 =8,000
Annual depreciation = 8,000
Accumulated Depreciation for 2 years = Annual depreciation× number of years
= 8,000× 2 = 16,000
Accumulated Depreciation for 2 years = $16,000
Jack and Jill need to save $6100 toward a new car. How long will it take them if they save $200 a month earning interest at 4.7% per year
Answer:
2 years 5 months.
Explanation:
Use the Time Value of Money techniques to find n (period it takes to save for required amount)
Using a financial calculator enter the following data
Fv = $6,100
Pmt = - $ 200 × 12 = - $2,400
P/y = 1
r = 4.7 %
Pv = 0
n = 2.4569
Thus it takes 2 years 5 months to save $6100 toward a new car under the given circumstances.
You are trying to explain to your friends the importance of using real GDP to measure economic health over time, but some of them still insist that nominal GDP is equally good. Use the data given below to show your friends the difference between real and nominal GDP.
Nominal GDP (millions of dollars)= $10,000
Price Level (GDP Deflector)= 92
Required:
What is real GDP given the nominal GDP and price level (GDP deflator)?
Answer: $10,869.57
Explanation:
The Nominal GDP is the total amount of final goods and services produced in a country within a period, usually a year. It is calculated using the current year's prices.
Real GDP adjusts the Nominal GDP for price changes by using the price level of a certain base year.
The GDP Deflator is the price level of the current year and can be useful in calculating how much the prices have risen or fallen from the prices of the base year.
The formula is;
(Nominal GDP/Real GDP)*100 = GDP Deflator
Making Real GDP the subject;
Real GDP = (Nominal GDP/GDP Deflator)*100
= (10,000/ 92) * 100
= $10,869.57
Planet Corporation acquired 90 percent of Saturn Company’s voting shares of stock in 20X1. During 20X4, Planet purchased 52,000 Playday doghouses for $28 each and sold 37,000 of them to Saturn for $34 each. Saturn sold all of the doghouses to retail establishments prior to December 31, 20X4, for $49 each. Both companies use perpetual inventory systems.
Required:
Prepare all journal entries Planet recorded for the purchase of inventory and resale to Saturn Company in 20X4.
Answer:
Purchase of Inventory by Planet (Parent)
Inventory $1,456,000 (debit)
Cash $1,456,000 (credit)
Sale of Inventory by Planet (Parent) to Subsidiary (Saturn)
Revenue $1,258,000 (debit)
Cost of Sales $1,258,000 (credit)
Sale to third Parties by Saturn
Cash $1,813,000 (debit)
Cost of Sales $1,036,000
Sales Revenue $1,813,000 (credit)
Inventory $1,036,000
Explanation:
Purchase of Inventory by Planet (Parent)
Inventory $1,456,000 (debit)
Cash $1,456,000 (credit)
Inventory : 52,000 × $28 = $1,456,000
Sale of Inventory by Planet (Parent)
Note : This is an Intragroup transaction and need to be eliminated
Revenue $1,258,000 (debit)
Cost of Sales $1,258,000 (credit)
Revenue : 37,000 × $34 = $1,258,000
Sale to third Parties by Saturn
Cash $1,813,000 (debit)
Cost of Sales $1,036,000
Sales Revenue $1,813,000 (credit)
Inventory $1,036,000
Sales Revenue = 37,000 × $49 = $1,813,000
Cost of Sales = 37,000 × $28 = $1,036,000
Purple Corporation acquired 75 percent of Socks Corporation’s common stock on January 1, 20X8, for $435,000. At that date, Socks reported common stock outstanding of $300,000 and retained earnings of $200,000, and the fair value of the noncontrolling interest was $145,000. The book values and fair values of Socks's assets and liabilities were equal, except for other intangible assets, which had a fair value $80,000 more than book value and a 10-year remaining life. Purple and Socks reported the following data for 20X8 and 20X9
Socks Corporation Purple Corporation
Year Net Income Comprehensive income Dividends paid Operating income Dividens paid
20X8 $40,000 50,000 15,000 $120,000 $70,000
20X9 60,000 65,000 30,000 140,000 70,000
Required:
Compute consolidated comprehensive income for 20X8 and 20X9.
20X8 20X9
Consolidated comprehensive income
Answer:
20X8 = 162,000
20X9 = $197,000
Explanation:
The calculation of the consolidated comprehensive income for the year 2008 and 2009 is shown below:
Consolidated comprehensive income
Particulars 20X8 20X9
Purple Corporation
Operating Income $120,000 $140,000
Add: Net Income
from Socks Corporation $40,000 $60,000
Less: Amortization of differential
($80,000 ÷ 10 Years) ($8,000) (8,000)
Consolidated net income $152,000 $192,000
Add: Comprehensive income
reported by Socks Corporation $10,000 $5,000
Consolidated
comprehensive income $162,000 $197,000
On January 1, Boston Enterprises issues bonds that have a $3,400,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much interest will Boston pay (in cash) to the bondholders every six months
Answer:
interest expense per coupon payment (every 6 months) = $153,000
Explanation:
In this case, since the bonds were sold at par, the interest expense and the actual cash payments are the same (no premium or discount would be amortized). To calculate the interest payment we just multiply the bonds' face value x annual interest rate x 1/2 (semiannual coupons) = $3,400,000 x 9% x 1/2 = $153,000
Take It All Away has a cost of equity of 10.81 percent, a pretax cost of debt of 5.45 percent, and a tax rate of 35 percent. The company's capital structure consists of 77 percent debt on a book value basis, but debt is 37 percent of the company's value on a market value basis. What is the company's WACC
Answer:
8.12%
Explanation:
The computation of the weighted average cost of capital is shown below:
= Cost of equity × weight of equity + pretax cost of debt × (1 - tax rate) × weight of debt
= 10.81% × 0.63 + 5.45% × (1 - 0.35) × 0.37
= 6.81% + 1.31%
= 8.12%
We simply applied the above formula by considerin the capital structure with its weight so that the correct percentage could come
he Clark Company fails to record these two adjusting journal entries: Depreciation on Equipment: $10 Cash Dividends declared: $40 Working capital will be:
Answer:
Working Capital will be overstated by the amount of $40.
Explanation:
Of the two the adjusting entries, we need to identify the adjusting entry that affects any element of Working Capital (Current Assets or Current Liability).
Depreciation Entries include : Debit Depreciation Expense (Expense) $10 and Credit Accumulated Depreciation $10.
Cash Dividends Declared Entries include : Debit Dividend (Equity) $40 and Credit Shareholders for Dividends (Liability) $40.
Thus, the Liabilities will be understated due to omission of Cash Dividends Declared Entries.
Subsequently, Working Capital will be overstated by the amount of $40.
Baseball Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $19,100. Budgeted cash receipts total $188,500 and budgeted cash disbursements total $190,200. The desired ending cash balance is $31,100. To attain its desired ending cash balance for January, the company should borro
Answer: $13,700
Explanation:
From the question, we are informed that Baseball Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $19,100. Budgeted cash receipts total $188,500 and budgeted cash disbursements total $190,200. The desired ending cash balance is $31,100.
To attain its desired ending cash balance for January, the company should borrow $13,700.
The solution has been attached.
a. Equipment with a book value of $79500 and an original cost of $169000 was sold at a loss of $33000.
b. Paid $106000 cash for a new truck.
c. Sold land costing $310000 for $420000 cash yielding a gainof $11000.
d. Long term investments in stock were sold for $95600 cash yielding a gain of $17000.
Required:
Use the above information to determine this company's cash flows from investing activities.
Answer:
Cash flow from Investing activities refers to cash transactions related to Fixed Assets as well as transactions related to the ownership of other company securities.
Cash-flow from Investing Activities
Sale of equipment (79,500 - 33,000).......................... $46,500
Purchase of New Truck ................................................... ($106,000)
Sale of Land.........................................................................$420,000
Sale of Long-term investments.......................................$95,600
Net cash provided by investing activities ...................$456,100
O'NeillO'Neill's Products manufactures a single product. Cost, sales, and production information for the company and its single product is as follows:
Selling price per unit is $54
Variable manufacturing costs per unit manufactured includes direct materials DM, direct labor DL, and variable MOH $27.
Variable operating expenses per unit sold $4
Fixed manufacturing overhead (MOH) in total for the year $120,000
Fixed operating expenses in total for the year $92,000
Units manufactured and sold for the year 12,000 units
Required:
a. Prepare an income statement for the upcoming year using variable costing.
b. Prepare an income statement for the upcoming year using absorption costing.
Answer:
Instructions are below.
Explanation:
The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).
Absorption costing income statement:
Sales= 12,000*54= 648,000
COGS= (12,000*27) + 120,000= (444,000)
Gross profit= 204,000
Total operating expenses= (12,000*4) + 92,000= (140,000)
Net operating income= 64,000
Variable costing income statement:
Sales= 648,000
Total variable cost= 12,000*(27 + 4)= (372,000)
Total contribution margin= 276,000
Fixed manufacturing overhead= (120,000)
Fixed operating expenses= (92,000)
Net operating income= 64,000