Answer:
$0.35 per share
Explanation:
According to the scenario, computation of the given data are as follows,
Net income = $68,000
Preferred cash dividend = $18,000
So, we can calculate the basic earning per share by using following formula,
Basic Earning per share = ( Net income - Preferred cash dividend) ÷ Outstanding common shares
= ($68,000 - $18,000) ÷ [( 58,000 × 2) + (28,000 × 2 × 6/12)
= $50,000 ÷ [ 116,000 + 28,000]
= $50,000 ÷ 144,000
= $0.35 per share
For each of the three independent situations below determine the amount of the annual lease payments. Each describes a finance lease in which annual lease payments are payable at the beginning of each year. Each lease agreement contains an option that permits the lessee to acquire the leased asset at an option price that is sufficiently lower than the expected fair value that the exercise of the option appears reasonably certain.
Situation 1 Situation 2 Situation 3
Lease term (years) 5 10 4
Lessor?s rate of return 10% 11% 9%
Fair value of leased asset $62,000 $421,000 $186,000
Lessor?s cost of leased asset $51,000 $421,000 $146,000
Bargain purchase option:
Option price $11,000 $51,000 $23,000
Exercisable at end of the year: 5 5 3
Required:
Determine the annual lease payments for each situation:
Answer:
a. The annual lease payment for Situation 1 is $12,774.47.
b. The annual lease payment for Situation 2 is $71,486.40.
c. The annual lease payment for Situation 3 is $57,412.37.
Explanation:
The annual lease payments can be calculated using the formula for calculating loan amortization as follows:
P = (A * (r * (1 + r)^n)) / (((1+r)^n) - 1) .................................... (1)
Where,
For Situation 1
P = Annual lease payments = ?
A = Fair value of leased asset = $62,000
r = interest rate = Lessor’s rate of return = 10%, or 0.01
n = Number of years of lease term = 5
Substituting all the figures into equation (1), we have:
P = ($62,000 * (0.01 * (1 + 0.01)^5)) / (((1+0.01)^5) - 1)
P = $12,774.47
Therefore, the annual lease payment for Situation 1 is $12,774.47.
For Situation 2
P = Annual lease payments = ?
A = Fair value of leased asset = $421,000
r = interest rate = Lessor’s rate of return = 11%, or 0.11
n = Number of years of lease term = 10
Substituting all the figures into equation (1), we have:
P = ($421,000 * (0.11 * (1 + 0.11)^10)) / (((1 + 0.11)^10) - 1)
P = $71,486.40
Therefore, the annual lease payment for Situation 2 is $71,486.40.
For Situation 3
P = Annual lease payments = ?
A = Fair value of leased asset = $186,000
r = interest rate = Lessor’s rate of return = 9%, or 0.09
n = Number of years of lease term = 4
Substituting all the figures into equation (1), we have:
P = ($186,000 * (0.09 * (1 + 0.09)^4)) / (((1 + 0.09)^4) - 1)
P = $57,412.37
Therefore, the annual lease payment for Situation 3 is $57,412.37.
The Davis family grows organic vegetables to sell at a local farmer’s market. Which are factors that directly affect their profit? Check all that apply.
an increase in the cost of farm equipment
a rise in demand for organic produce
an increase in customers at the market
a change in the market price for non-organic fruit
a sale on organic meats at the market
(answer is abc)
Answer:
an increase in the cost of farm equipment
Explanation:
With the Davis family continuously growing and selling vegetables they would need to repair or get new equipment
Answer:
a b c
Explanation:
Suppose Germany, a large country, imposes a tariff on tuna imports. Before the tariff, all the countries in the world are engaged in free trade in tuna. Explain why.
(1). The German consumers pay a higher price for tuna.
(2). The German producers receive a higher price for tuna.
(3). The world price of tuna increases.
(4). The tariff makes Vietnam, a tuna exporting country, worse off.
(5). Vietnamese tuna consumers suffer because of the tariff.
Answer:
1. This is true.
The Germans will pay a higher price for tuna because the tariff will increase the price of imported tuna and the reduction in completion with the local producers will lead to higher prices as the local producers take up their price.
2. This is true.
German producers no longer have to compete as much with imported tuna which was cheaper. They will therefore be able to raise their prices.
3. This statement is false.
The world price of Tuna DOES NOT increase because the tariff is only applicable in Germany. Other parts of the world will trade tuna as before. This is what is assumed.
4. This statement is true.
If Vietnam was exporting tuna to Germany, they will become worse off because they will see a decline in demand for their tuna on account of the tariffs making the tuna more expensive.
5. This is false.
Vietnamese tuna consumers will still pay the same price to get tuna because Vietnam produces the tuna. It is Vietnam's producers that will suffer not the consumers.
The Chilton Corporation specializes in manufacturing one type of desk lamp. Chilton allocates variable manufacturing overhead costs on the basis of machine hours. Chilton budgeted 0.5 machine hours per lamp and allocates overhead at a rate of $1.70 per machine hour. Last year Chilton manufactured 20,000 lamps, used 160,000 machine hours and incurred actual overhead costs of $192,000. What was Chilton's variable manufacturing overhead rate variance last year?
a. $24,000 favorable
b. $24,000 unfavorable
c. $210,900 unfavorable
d. $210,900 favorable
Answer:
Variable manufacturing overhead rate variance = 80,000 favorable
Explanation:
Given:
Overhead rate variance = $1.70 per hour
Total machine hour = 160,000 hour
Actual overhead costs = $192,000
Find:
Variable manufacturing overhead rate variance
Computation:
Variable manufacturing overhead rate variance = [Standard overhead rate - Actual overhead rate]Actual hour
Variable manufacturing overhead rate variance =[1.7 - (192,000 / 160,000)]160,000
Variable manufacturing overhead rate variance = [1.7 - (1.2)]160,000
Variable manufacturing overhead rate variance = [0.5]160,000
Variable manufacturing overhead rate variance = 80,000 favorable
Bill Smith is evaluating the performance of four large-cap equity portfolios: Funds A, B, C, and D. As part of his analysis, Smith computed the Sharpe ratio and the Treynor's measure for all four funds. Based on his finding, the ranks assigned to the four funds are as follows: Fund Treynor Measure Rank Sharpe Ratio Rank A 1 4 B 2 3 C 3 2 D 4 1 The difference in rankings for Funds A and D is most likely due to:
Question Completion with Options:
a. A lack of diversification in fund A as compared to fund D.
b. Different benchmarks used to evaluate each fund’s performance.
c. A difference in risk premiums.
Answer:
The difference in rankings for Funds A and D is most likely due to:
a. A lack of diversification in fund A as compared to fund D.
Explanation:
a) Data and Calculations:
Fund Treynor Measure Rank Sharpe Ratio Rank
A 1 4
B 2 3
C 3 2
D 4 1
b) The Sharpe ratio and the Treynor measure are two financial performance ratios that measure the risk-adjusted rate of return of an investment. Specifically, the Sharpe ratio helps investors to understand an investment's return profile when compared to its risk profile. On the other hand, the Treynor ratio measures the excess return generated for portfolio risk per unit.
In conclusion, the Sharpe ratio appears to be a better measure with a portfolio that is not properly diversified, while the Treynor ratio works better with a well-diversified portfolio.
The cash account for American Medical Co. at April 30 indicated a balance of $334,985. The bank statement indicated a balance of $388,600 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: A.Checks outstanding totaled $61,280. B.A deposit of $42,500, representing receipts of April 30, had been made too late to appear on the bank statement.
Answer:
Missing word "The bank collected $42,000 on a $40,000 note, including interest of $2,000. A check for $7,600 returned with the statement had been incorrectly recorded by American Medical Co. as $760. The check was for the payment of an obligation to Targhee Supply Co. for a purchase on account. A check drawn for $240 had been erroneously charged by the bank as $420. Bank service charges for April amounted to $145. Instructions: Prepare a bank reconciliation."
Bank reconciliation statement
Particulars Amount ($)
Balance as per bank statement 388,600
Add: Deposit in transit 42,500
Add: Error in recording the check (420-240) 180 431,280
Less: Outstanding checks (61,280)
Adjusted balance as per Bank statement 370,000
Bank reconciliation statement
Particulars Amount ($)
Balance as per books 334,985
Add: Note collected 40,000
Add: Interest collected 2,000 376,985
Less: Error in recording check (7,600-760) (6,840)
Less: Service charges levied (145)
Adjusted balance as per books 370,000
The following are selected 2017 transactions of Shamrock Corporation.
Sept. 1 Purchased inventory from Encino Company on account for $55,600. Shamrock records purchases gross and uses a periodic inventory system.
Oct. 1 Issued a $55,600, 12-month, 8% note to Encino in payment of account.
Oct. 1 Borrowed $55,600 from the Shore Bank by signing a 12-month, zero-interest-bearing $59,960 note.
Required:
Prepare journal entries for the selected transactions above.
Answer and Explanation:
The journal entries are shown below:
a.
On Sep-01
Purchases $55,600
Accounts Payable $55,600
(Being inventory is purchased)
On Oct-01
Accounts Payable $55,600
Notes Payable $55,600
(being note payable is issued)
On Oct-01
Cash $55,600
Discount on Notes Payable $4,360
Notes Payable $59,960
(Being amount is borrowed)
b
On Dec-31
Interest Expense $1,112 ($55,600 × 8% × 3 ÷ 12)
Interest Payable $1,112
(Being interest on the note is recorded)
On Dec-31
Interest Expense $1,090 ($4,360 ÷ 12 × 3)
Discount on Notes Payable $1,090
(Being discount on the note is recorded)
he SSC, a cash-method partnership, has a balance sheet that includes the following assets on December 31 of the current year: Basis FMV Cash $ 180,000 $ 180,000 Accounts receivable 0 60,000 Land 90,000 120,000 Total $ 270,000 $ 360,000 Susan, a one-third partner, has an adjusted basis of $90,000 for her partnership interest. If Susan sells her entire partnership interest to Emma for $120,000 cash, how much capital gain and ordinary income must Susan recognize from the sale
Answer:
$10,000 capital gain; $20,000 ordinary income
Explanation:
Calculation to determine how much capital gain and ordinary income must Susan recognize from the sale
Calculation for ORDINARY INCOME
Using this formula
Ordinary income=(
Unrealized receivables × Interest)
Let plug in the formula
Ordinary income=($60,000*1/3)
Ordinary income=$20,000
Calculation for CAPITAL GAIN
Using this formula
Capital gain= Total gain -Ordinary income
Let plug in the formula
Capital gain=$30,000-$20,000
capital gain=$10,000
Therefore the capital gain and ordinary income that Susan must recognize from the sale are:
$10,000 capital gain; $20,000 ordinary income
Where would you go to get information for your business plan?
Credible websites for planning, credible websites for research on business, and anything to improve your knowledge to be prepared.
Jameson Corporation was organized on May 1. The following events occurred during the first month.
A. Received $67,000 cash from the five investors who organized Jameson Corporation. Each investor received 110 shares of $10 par value common stock.
B. Ordered store fixtures costing $10,000.
C. Borrowed $16,000 cash and signed a note due in two years.
D. Purchased $18,000 of equipment, paying $1,400 in cash and signing a six-month note for the balance.
E. Lent $1,700 to an employee who signed a note to repay the loan in three months.
F. Received and paid for the store fixtures ordered in (b).
Required:
Prepare journal entries for each transaction.
Answer:
Transaction A
Debit : Cash $67,000
Credit : Common Stock $67,000
Transaction B
Debit : Store fixtures $10,000
Credit : Accounts payable $10,000
Transaction C
Debit : Cash $16,000
Credit : Note Payable $16,000
Transaction D
Debit : Equipment $18,000
Credit : Cash $1,400
Credit : Note Payable $16,600
Transaction E
Debit : Note Receivable $1,700
Credit : Cash $1,700
Transaction F
Debit : Accounts Payable $10,000
Credit : Cash $10,000
Explanation:
When there is no immediate payment of cash recognize a liability accounts payable otherwise recognize cash.
Simon's most recent income statement is given below. Sales (8,000 units) $160,000 Less variable expenses (68,000) Contribution margin 92,000 Less fixed expenses (50,000) Net income $42,000 Required: a. Contribution margin per unit is b. If sales are doubled total variable costs will equal c. If sales are doubled total fixed costs will equal d. If 20 more units are sold, profits will increase by e. Compute how many units must be sold to break even. f. Compute how many units must be sold to achieve operating income of $60,000. g. Compute the revenue needed to achieve an after tax income of $30,000 given a tax rate of 30%.
Answer:
a. $11.50
b. $136,000
c. $50,000
d. $230
Explanation:
Contribution = sales - variable costs
Fixed costs do not vary with level of sales or production.
A machine cost $1104000, has annual depreciation of $184000, and has accumulated depreciation of $874000 on December 31, 2020. On April 1, 2021, when the machine has a fair value of $253000, it is exchanged for a machine with a fair value of $1242000 and the proper amount of cash is paid. The exchange had commercial substance. The new machine should be recorded at $1127000. $1242000. $989000. $1219000.
Answer:
$1,242,000
Explanation:
The new machine is to be recorded at its Fair Value which is $1,242,000 because the exchange has a commercial substance. Asset forgone is credited by its original cost, and accumulated depreciation till date of exchange is debited. Cash paid and loss or gain is adjusted as required. But the new asset is debited by the amount of its Fair Value on the day of exchange.
Jan. 27 Received Lee's payment for principal and interest on the note dated December 13.
Mar. 3 Accepted a $5,000, 10%, 90-day note in granting a time extension on the past-due account receivable of Tomas Company.
17 Accepted a $2,000, 30-day, 9% note in granting H. Cheng a time extension on his past-due account receivable.
Apr. 16 H. Cheng dishonored his note.
May 1 Wrote off the H. Cheng account against the Allowance for Doubtful Accounts.
June 1 Received the Tomas payment for principal and interest on the note dated March 3.
Required:
Calculate the interest amounts and use those calculated values to prepare your journal entries.
Question Completion:
Dec. 13 Accepted a $9,500, 45-day, 8% note dated December 13 in granting Miranda Lee a time extension on her past-due account receivable.
Answer:
Journal Entries:
Jan. 27 Debit Cash $9,595
Credit Notes Receivable (Miranda Lee) $9,500
Credit Interest Revenue $95
To record the full settlement of note and interest.
Mar. 3 Debit Notes Receivable (Tomas Company) $5,000
Credit Accounts Receivable (Tomas Company) $5,000
To record the acceptance of a 10%, 90-day note.
17 Debit Notes Receivable (H. Cheng) $2,000
Credit Accounts Receivable (H. Cheng) $2,000
To record the acceptance of a 30-day, 9% note
Apr. 16 Debit Accounts Receivable (H. Cheng) $2,015
Credit Notes Receivable (H. Cheng) $2,000
Credit Interest Revenue $15
To record the dishonoring of Cheng's note.
May 1 debit Allowance for Doubtful Accounts $2,105
Credit Accounts Receivable (H. Cheng) $2,015)
To record the write-off of H. Cheng's account.
June 1 Debit Cash $5,125
Credit Notes Receivable (Tomas Company) $5,000
Credit Interest Revenue $125
To record the full settlement of Tomas' account.
Explanation:
a) Data and Calculations:
Jan. 27 Cash $9,595 Notes Receivable (Miranda Lee) $9,500 Interest Revenue $95
Mar. 3 Notes Receivable (Tomas Company) $5,000 Accounts Receivable (Tomas Company) $5,000, 10%, 90-day note
17 Notes Receivable (H. Cheng) $2,000 Accounts Receivable (H. Cheng) $2,000 30-day, 9% note
Apr. 16 Accounts Receivable (H. Cheng) $2,015 Notes Receivable (H. Cheng) $2,000 Interest Receivable $15
May 1 Allowance for Doubtful Accounts $2,105 Accounts Receivable (H. Cheng) $2,015)
June 1 Cash $5,125 Notes Receivable (Tomas Company) $5,000 Interest Revenue $125
Interest amounts
Computing Straight-Line and Double-Declining-Balance Depreciation
On January 2, 2016, Dechow Company purchases a machine to help manufacture a part for one of its key products. The machine cost $306,180 and is estimated to have a useful life of six years, with an expected salvage value of $32,760.
Compute each year's depreciation expense for 2016 and 2017 for each of the following depreciation methods.
a. Straight-line.
b. Double-declining balance.
Answer:
a.
2016 = $45,570
2017 = $45,570
b.
2016 = $102,080
2017 = $68,014
Explanation:
Straight line method
Straight line method charges a fixed amount of depreciation
Depreciation Charge = (Cost - Salvage Value) ÷ Estimated useful life
2016
Depreciation Charge = $45,570
2017
Depreciation Charge = $45,570
Double declining method
Double declining method charges a higher amount of depreciation at the early years and less in the later years
Depreciation Charge = 2 x SLDP x BVSLDP
2016
Depreciation Charge = 2 x 16.67 % x $306,180 = $102,080
2017
Depreciation Charge = 2 x 16.67 % x ($306,180 - $102,080) = $68,014
In its most recent annual report, Appalachian Beverages reported current assets of $54,000 and a current ratio of 1.80. Assume that the following transactions were completed: (1) purchased merchandise for $6,000 on account, and (2) purchased a delivery truck for $10,000, paying $1,000 cash and signing a two-year promissory note for the balance.
Compute the updated current ratio (round answers to 2 decimal places)
Transaction (1) ________________
Transaction (2) ________________
Answer:
Current Ratio - Transaction 1 = 1.6666 rounded off to 1.67
Current Ratio - Transaction 2 = 1.6388 rounded off to 1.64
Explanation:
The current ratio is a measure of liquidity which measures the amount of current assets a business has to pay off each $1 of current liability. It is calculated as follows,
Current Ratio = Current Assets / Current Liabilities
We know the initial current ratio and current assets. The initial current liabilities will be,
1.8 = 54000 / Current Liabilities
Current Liabilities = 54000 / 1.8
Current Liabilities = $30000
Transaction 1
The result of transaction 1 will be that the current assets will increase by $6000 as inventory increases and the current liabilities will also increase by $6000 as accounts payable are increasing. The new current ratio will be,
Current Ratio - Transaction 1 = (54000 + 6000) / (30000 + 6000)
Current Ratio - Transaction 1 = 1.6666 rounded off to 1.67
Transaction 2
The result of transaction 2 will be that the current assets will decrease by $1000 as payment for truck which is a fixed asset is made partly by cash and the current liabilities will not increase as the note signed for the remaining payment of the truck is due after 2 years thus it is a non current liability. The new current ratio will be,
Current Ratio - Transaction 2 = (54000 + 6000 -1000) / (30000 + 6000)
Current Ratio - Transaction 2 = 1.6388 rounded off to 1.64
Fiat money has value based on:
O A. the role it plays in traditional religious ceremonies.
O B. the type of material that was used to make it.
O C. a government declaring that it is a legal currency.
O D. an agreement that it can be exchanged for something else.
Answer:
D.an agreement that it can be exchanged for something else.
Explanation:
The value is given thanks to the people who trust the group or gov. that is emmiting this money.
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Answer:
nope im not going to the link sir im not fkn stu.pid
Explanation:
Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $1.30 per share, and the current price of its common stock is $40 per share. The expected growth rate is 5 percent. a. Compute the cost of retained earnings (Ke). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Candy or cookies? i want to know
Answer:
Candy
Explanation:
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Cedric Company recently traded in an older model computer for a new model. The old model's book value was $140,000 (original cost of $370,000 less $230,000 in accumulated depreciation) and its fair value was $210,000. Cedric paid $65,000 to complete the exchange, which has commercial substance.
Calculate the following values:
1. Amount to debit for new equipment
2. Amount to debit accumulated depreciation
3. Amount to credit to cash
4. Amount to credit for old equipment
5. Gain or loss on sale
Answer:
1. $210,000
2.$230,000
3. $65,000
4. $370,000
5. $135,000 loss
Explanation:
1. Amount to debit for new equipment
Use the Fair Value of Asset given
2. Amount to debit accumulated depreciation
Use the accumulated depreciation of asset given up.
3. Amount to credit to cash
Use the Cash Paid up
4. Amount to credit for old equipment
Use the cost of asset given up
5. Gain or loss on sale
Gain or loss = Carrying Amount - Fair Value - Cash traded up
Highgrove Industries must decide which process technology to adopt, given the information below. Cost Technology A Technology B Technology C Price per unit $3 $3 $3 Fixed costs per year $80,000 $120,000 $130,000 Variable costs per unit $2.20 $1.85 $1.65 Which one of the process technologies would you recommend they adopt if the expected demand is 100,000 units
Answer:
Technology C
Explanation:
Total Cost = Fixed Cost + Variable cost * (Number of Units)
Total Cost for Technology A = $80000 + $2.20*(100,000 units)
Total Cost for Technology A = $300,000
Total Cost for Technology B = $120,000 + $1.85*(100,000 units)
Total Cost for Technology B = $305,000
Total Cost for Technology C = $130,000 + $1.65*(100,000 units)
Total Cost for Technology C = $195,000
Conclusion: The minimum total cost for 100,000 Unit is for process technology C, Hence this technology would be recommended
Xavier Company had the following transactions during the current year:
• Earned revenues of $100,000 and incurred expenses of $56,000, all in cash.
• Purchased a truck for $20,000.
• Sold land for $10,000.
• Borrowed $15,000 from a local bank.
What was the total change in cash during the year?
The total change in cash of the Xavier Company would be $44,000.
What is the cash?Cash is defined as money in the form of actual currency, such as banknotes and coins. Cash is a current asset in bookkeeping and financial accounting that consists of currency or currency equivalents that may be obtained immediately or almost immediately.
Computation of change in cash:
Total change in cash = Cash change in operating activity + Cash change in Investing activities + Financing activities
Total change in cash = $44,000–$15,000 + $15,000
Total change in cash = $44,000
Whereas,
Change in cash in operating activities:
Change in cash in operating activities = Revenue – Expenses
Change in cash in operating activities = $100,000 – $56,000
Change in cash in operating activities = $44,000
Change in cash in investing activities:
Change in cash in investing activities = Sold land – Purchase of truck
Change in cash in investing activities = $10,000 – $25,000
Change in cash in investing activities = -$15,000
Change in cash from financing activities:
Change in cash from financing activities = Borrowed $15,000 from local bank = $15,000
Therefore, The Xavier Company's total cash change would be $44,000.
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what is human resource managment
Explanation:
Human resource management, or HRM, is defined as the process of managing employees in a company and it can involve hiring, firing, training and motivating employees.
An example of human resource management is the way in which a company hires new employees and trains those new workers.
noun
27
3
Answer:Human aid management is the strategic approach to the powerful management of people in a agency or corporation such that they assist their business gain a competitive benefit. it's far designed to maximise employee overall performance in provider of an corporation's strategic targets.
Explanation:
explain the importance of financial accounts to the owners and creditors
Answer:
Explanation:
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Presented below is a list of items that could be included in the intangible assets section of the balance sheet. Choose the items that meet the qualifications to be treated as an intangible asset on the balance sheet.
a. Unsuccessful legal defense costs of trademark
b. Legal costs in securing copyright
c. Purchased patent
d. Investment in subsidiary
e. Filing fees for patent
f. Purchase of a franchise
g. Successful legal defense costs for copyright
h. Research costs for new drug
i. Sale of a franchise
j. Internal development costs for patent
k. Purchased copyright
l. Initial training costs for startup of new business
Answer:
Intangible Assets:
c. Purchased patent
f. Purchase of a franchise
k. Purchased copyright
Explanation:
Intangible assets are financial resources that have no physical properties. They must be acquired by the entity as a result of past events to be recognized. Examples of intangible assets are Brands, Goodwill, Intellectual properties (e.g. Trade Secrets, Patents, Trademark, and Copyrights), Licensing rights, Customer lists, and qualified R&D.
They are usually amortized over their estimated useful life. Annually, the entity must carry out impairment tests to determine if there is an impairment loss, especially for indefinite intangible assets which are not amortized.
The legal costs are not intangible assets on their own but can be capitalized. This means that they can be included in the affected intangible assets.
what is the meaning of dialogue
Answer:
it is a communication that permits people to share their honest opinions even those which have,historically, been difficult to discuss in ways that get ideas out on the table but without offending others
Betram Chemicals Company processes a number of chemical compounds used in producing industrial cleaning products. One compound is decomposed into two chemicals: anderine and dofinol. The cost of processing one batch of compound is $73,000, and the result is 5,600 gallons of anderine and 7,600 gallons of dofinol. Betram Chemicals can sell the anderine at split-off for $13.00 per gallon and the dofinol for $7.45 per gallon. Alternatively, the anderine can be processed further at a cost of $7.50 per gallon (of anderine) into cermine. It takes 2 gallons of anderine for every gallon of cermine. A gallon of cermine sells for $65.
Required:
1. List the relevant benefits and costs for each alternative.
2. Which alternative is more cost effective and by how much?
3. What if the production of anderine into cermine required additional purchasing and quality inspection activity? Every 500 gallons of anderine that undergo further processing required 20 more purchase orders at $10 each and 15 more quality inspection hours at $25 each. Which alternative would be better and by how much?
Answer:
Betram Chemicals Company
1. Relevant benefits and costs for each alternative:
Sale at split-off Sale after
further processing
Revenue $129,420 $238,620
Joint Costs 73,000 73,000
Cost for further processing - 42,000
Gross profit $56,420 $123,620
Additional profit $0 $67,200
2. Further processing of Anderine is more cost-effective by $67,200.
3. Further processing of Anderine is still better by $60,760.
Explanation:
a) Data and Calculations:
Anderine Dofinol Cermine Total Costs
Gallons 5,600 7,600 $73,000 $73,000
Selling price per gal. $13.00 $7.45
Sales revenue $72,800 $56,620 $129,420
Gross profit $56,420
Further processing $42,000
Total costs of production $115,000 $115,000
Output (5,600) 7,600 2,800
Selling price per gallon $7.45 $65
Sales revenue $56,620 $182,000 $238,620
Gross profit $123,620
Profit from further processing:
Gross profit with further processing $123,620
Gross profit before further processing 56,420
Additional profit $67,200
1. Relevant benefits and costs for each alternative:
Sale at split-off Sale after
further processing
Revenue $129,420 $238,620
Joint Costs 73,000 73,000
Cost for further processing - 42,000
Gross profit $56,420 $123,620
Additional profit $0 $67,200 ($123,620 - $56,420)
What if:
Purchasing order cost (5,600/500 * 20 * $10) = $2,240
Quality inspection cost (5,600/500 * 15 * $25) = $4,200
Additional costs = $6,440
Reduced additional profit = $60,760 ($67,200 - $6,440)
The partnership of Hendrick, Mitchum, and Redding has the following account balances: Cash $ 53,000 Liabilities $ 38,000 Noncash assets 138,000 Hendrick, capital 98,000 Mitchum, capital 73,000 Redding, capital (18,000 ) This partnership is being liquidated. Hendrick and Mitchum are each entitled to 40 percent of all profits and losses with the remaining 20 percent going to Redding. What is the maximum amount that Redding might have to contribute to this partnership because of the deficit capital balance
Answer:
$45,600
Explanation:
Particulars Amount
Redding capital $18,000
Potential loss of non-cash Assets (138,000*20%) $27,600
Maximum amount contributed by Redding, Capital $45,600
So, the maximum amount that Redding might have to contribute to this partnership because of the deficit capital balance is $45,600.
JDog Corporation owns stock in Oscar Inc. valued at $2,000,000 at the beginning of the year and $2,200,000 at year-end. Jdog received a $10,000 dividend from Oscar Inc. What temporary book-tax differences associated with its ownership in Oscar stock will Jdog report for the year in the following alternative scenarios (income difference only-ignore the dividends-received deduction)?
a. JDog owns 5 percent of the Oscar Inc. stock. Oscar's income for the year was $500,000.
b. JDog owns 40 percent of the Oscar Inc. stock. Oscar's income for the year was $500,000.
Answer:
a. The temporary book-tax differences associated with 5 percent ownership in Oscar stock which Jdog will report for the year is $0.
b. The temporary book-tax differences associated with 40 percent ownership in Oscar stock which Jdog will report for the year is $190,000.
Explanation:
a. JDog owns 5 percent of the Oscar Inc. stock. Oscar's income for the year was $500,000
The 5 percent ownership implies that JDog has to report $10,000 in book income, and also report $10,000 in gross income. Therefore, we have:
Temporary book difference = Amount to report in book income – Amount to report in gross income = $10,000 - $10,000 = $0
Therefore, the temporary book-tax differences associated with 5 percent ownership in Oscar stock which Jdog will report for the year is $0.
b. JDog owns 40 percent of the Oscar Inc. stock. Oscar's income for the year was $500,000.
The 40 percent ownership implies that:
Amount to report in book income = $40% * $500,000 = $200,000
Amount to report in gross income = $10,000
Temporary book difference = Amount to report in book income – Amount to report in gross income = $200,000 - $10,000 = $190,000
Therefore, the temporary book-tax differences associated with 40 percent ownership in Oscar stock which Jdog will report for the year is $190,000.
Exercise 10-3 Lump-sum purchase of plant assets LO C1 Rodriguez Company pays $410,670 for real estate with land, land improvements, and a building. Land is appraised at $234,000; land improvements are appraised at $52,000; and a building is appraised at $234,000. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase.
Answer:
1. Allocation of Appraised % of total Total cost Apportioned
Total Cost Value appraised value of acquisition Cost
Land $234,000 45% $410,670 $184,801.50
Land $52,000 10% $410,670 $41,067
Improvements
Building $234,000 45% $410,670 $184,801.50
Total $520,000 100% $410,670
2. Date Accounts title and explanation Debit Credit
Land $184,801.50
Land Improvements $41,067
Building $184,801.50
Cash $410,670
(Lump-sum purchases recorded)