Answer:
Effects on the Income Statement: The total Cost of Goods Sold, Gross Profit, and Net Income for the two periods will be accurate, but the allocation of these amounts between periods will be wrong.
Four years ago, the cable television company in your area increased its price by 16 percent. As a result, its total revenue increased. Last year, a new company started providing television service using satellite dishes. This year the cable company increased its price by 16 percent, but total revenue fell. This is likely the result of which of the following?
A. Demand facing an individual store is generally more elastic than demand facing the entire industry.
B. Four years ago, demand for television service was inelastic due to a lack of available substitutes.
C. This year, demand for television service is elastic due to the presence of an available substitute.
D. All of the above are correct.
Answer:
B. Four years ago, demand for television service was inelastic due to a lack of available substitutes.
Explanation:
Inelastic demand is a demand where the demand is not impacted when the price of the goods is rise or not also the reasons is of lacking of subsitutes
In the case when the company rise the price for the second time by 16% so there is an alternative available to the customers and the customers move to the other company so here the revenue of the company would be fallen
hence, the option b is correct
Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 715,000 shares of stock outstanding. Under Plan II, there would be 465,000 shares of stock outstanding and $6.75 million in debt outstanding. The interest rate on the debt is 7 percent, and there are no taxes.
a. Assume that EBIT is $1.6 million. Compute the EPS for both Plan I and Plan II. (Do not round intermediate calculations and round your answers to 2 decimal places, 32.16.)
EPS
Plan I $
Plan II $
b. Assume that EBIT is $3.1 million. Compute the EPS for both Plan I and Plan II. (Do not round intermediate calculations and round your answers to 2 decimal places, 32.16.)
EPS
Plan I $
Plan II $
c. What is the break-even EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)
Break-even EBIT $
Answer and Explanation:
The computation is shown below
As we know that
1. EPS = ( Net income - dividends ) ÷ Average number of share
A.
For Plan 1
Number of share = 715,000
EPS = 1600000 ÷ 715000
= 2.23
For Plan 2
Net income = EBIT = $1.6 million = $1,600,000
Interest = 0.07*6,750,000 = 472,500
EBT = 1,127,500
Tax = 0
Net Income = 1,127,500
Numberof share = 465,000
So,
EPS = $1,127,500 ÷ 465000
= 2.42
B.
For Plan 1
EPS = 3100000 ÷ 715000
= 4.33
For Plan 2
When EBIT = 3,100,000
Interest = 0.07 × 6,750,000 = $472,500
Net Income = 2,627,500
So,
EPS = $2,627,500 ÷ 465000
= 5.65
C.
Plan 1 EBIT = Plan 2 EBIT
EBIT ÷ 715000 = (EBIT - 0.07 × $6,750,000) ÷ 465000
EBIT = 1,351,350 or $1.35 million
Question 5725
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5
Michael Arthur deposited $2,500 in a new regular savings account that earns 5% Interest compounded semiannually. He made no other deposits or withdrawals.
a) What was the amount in the account at the end of 1 year?
b) What is the compound Interest?
Answer:
The amount in the account at the end of 1 year will be $ 2,626.56, and the interest generated will be $ 126.56.
Explanation:
Given that Michael Arthur deposited $ 2,500 in a new regular savings account that earns 5% interest compounded semiannually, and has made no other deposits or withdrawals, to determine what was the amount in the account at the end of 1 year and what is the compound interest the following calculations must be performed:
2,500 x (1 + 0.05 / 2) ^ 1x2 = X
2,500 x 1,025 ^ 2 = X
2,500 x 1.050625 = X
2,626.56 = X
2626.56 - 2500 = 126.56
Therefore, the amount in the account at the end of 1 year will be $ 2,626.56, and the interest generated will be $ 126.56.
Oriole Company purchased land as a factory site for $1340000. Oriole paid $115000 to tear down two buildings on the land. Salvage was sold for $8000. Legal fees of $5080 were paid for title investigation and making the purchase. Architect's fees were $46200. Title insurance cost $3500, and liability insurance during construction cost $3800. Excavation cost $15660. The contractor was paid $4400000. An assessment made by the city for pavement was $9900. Interest costs during construction were $256000. The cost of the land that should be recorded by Oriole Company is
Answer: $1465480
Explanation:
The cost of the land that should be recorded by Oriole Company will be calculated as:
Purchase cost = $1340000
Add: Cost to tear down two buildings = $115000
Add: Legal fees = $5080
Add: Title insurance = $3500
Add: Assessment cost = $9900
Less: Salvage = $8000
Cost of the land = $1465480
Therefore, The cost of the land that should be recorded by Oriole Company is $1465480
Question 7
What is the GREATEST risk faced by entrepreneurs?
A
that their business will fail and result in a financial loss
B
that market regulation will increase and reduce profits
С
that their supply will not be able to meet consumer demand
D
that competition in the market in which they operate will increase
Answer:
I think option A
that their business will fail and result in a financial loss
Lucia lives in Miami and loves to eat desserts. She spends her entire weekly allowance on yogurt and pie. A bowl of yogurt is priced at $1.50, and a piece of pecan pie is priced at $4.50. At her current consumption point, Lucia's marginal rate of substitution (MRS) of yogurt for pie is 3. This means that Lucia is willing to trade three bowls of yogurt per week for one piece of pie per week. Does Lucia's current bundle maximize her utility in other words, make her as well off as possible? If not, how should she change it to maximize her utility?
a. Lucia's current bundle maximizes her utility, and she should keep it unchanged.
b. Lucia could increase her utility by buying more yogurt and less pie per week.
c. Lucia could increase her utility by buying less yogurt and more pie per week.
Answer:
a. Lucia's current bundle maximizes her utility, and she should keep it unchanged.
Explanation:
The computation is shown below:
As we know that the utility would be maximized when the marginal rate of substitution is equivalent to the price ratio
I.e.
MRS = Price ratio
Here, Price ratio is
= $4.5 ÷ $1.5
= 3
So the 3 would also represent the marginal rate of substitution (MRS)
Therefore the correct option is a.
hence, the rest of the options would be incorrect
Carole was an avid investor. She purchased 500 shares of common stock for GH Inc. based on an article she read about the publicly traded company.
Which of the following would Carole be considered?
•
A partner in GH Inc.
•
A member of the Board of Directors of GH Inc.
•
A stockholder of GH Inc.
•
A corporate officer of GH Inc
Answer:
Option C
Explanation:
Carole has 500 shares and thus he is the share holder of the GH Inc. Since a shareholder is equivalent to some one who holds the company's stock and hence Carole can be considered as stock holder too. Stock holders are not member of board of directors however, they vote while selection of members of board of directors.
The are not partners as they have no share in investment and profit.
Thus, option C is the correct answer
Which of the following is not true concerning account titles:multiple choiceThere is a wide range of account titles among different types of companies.All companies use exactly the same account titles.There is a small range in account titles regardless of type of company.All companies use different account titles.
Answer:
There is a wide range of account titles among different types of companies
Explanation:
An account title can be regarded as a
unique name that is been assigned or associated to particular account in an accounting system. It is very crucial to use An account title when there is a need for identification of accounts by
accounting staff , this is because the title usually conveys the purpose of that particular account. Some of the account titles that can be used are;
Cash on Hand, Petty Cash Fund, and
Cash in Bank,. In account titles;
✓All companies use exactly the same account titles.
✓There is a small range in account titles regardless of type of company.
✓All companies use different account titles.
1. In the problem solving process, which step comes before Take Action?
O A. Define the Problem
O B. Come up with Solutions
O C. Finish your shift
O D. Choose a Solution
Creating potential solutions Investigating the Solutions. Making the finest Solution choice (s). Considering the upcoming course of action (Next Steps) Hence option B is correct.
What are solving process ?To deal with the numerous difficulties encountered at work, problem solving models are used. While many people frequently find solutions to difficulties, there are other methods that can be employed.
A shared, collaborative, and systematic approach to problem solving typically results in the quicker resolution of complex difficulties for teams, working groups, and boards, among other groups.
In the first step, the issue's context, history, and symptoms are diagnosed. After the group has a firm understanding of the issue, they look into the more widespread symptoms to learn what the issue means, who it impacts, and how critical/urgent it is.Its purpose is to treat the symptoms.
The goal of analytical, creative issue solving is to come up with multiple answers rather than just one. The most obvious solution to an issue is frequently not the best one.
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# SPJ 2
A worker may prefer to be treated as an independent contractor (rather than an employee) for which of the following reasons:____________
a. Work-related expenses of an independent contractor are deductible for AGI.
b. All of the self-employment tax is deductible for income tax purposes.
c. A Schedule C does not have to be filed.
d. Avoids the overall limitation (50%) as to business meals.
e. None of these choices are correct.
Answer: a. Work-related expenses of an independent contractor are deductible for AGI.
Explanation:
Independent Contractors are allowed to deduct the expenses they incur while contracting, from the AGI (Annual Gross Income).
This therefore reduces the taxes that the contractors have to pay unlike with employees who will have to pay income tax and cannot deduct much from work.
Miscellaneous costs associated with the purchase of new equipment? include:
Insurance costs before the equipment is ready for use $3,000
Maintenance costs before the equipment is ready for use 700
Insurance costs after the equipment is placed into service 1,400
Cost of trial run 800
Training costs for employees to learn how to use equipment 400
What is the amount assigned to the new? equipment?
A. $4,200.
B. $4,500.
C. $4,900.
D. $6,300.
Answer:
C. $4,900.
Explanation:
Determining the amount assigned to the new equipment
Details Amount
Insurance costs before the equipment is ready for use $3,000
Add: Maintenance costs before the equipment is ready for use $700
Add: Cost of trial run $800
Add: Training costs for employees to learn how to use equipment $400
Total costs assigned to the new equipment $4,900
So, the correct options is option c.
Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system product A has been assigned overhead of 21.70 per unit while product B has been assigned 10.44 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information.
Cost Pools Activity Costs Cost Driver Driver Consumption
Machine Setup 340,000 Setup Hours 5,000
Materials Handling 100,000 Pounds of materials 20,000
Electric Power 24,000 Kilowatt Hours 24,000
The following cost information pertains to the production of A and B, just two of its many products.
A B
Number of units produced 5,000 10,000
Direct Materials Cost 36,000 30,000
Direct Labor Costs 27,000 34,000
Number of Setup Hours 100 100
Pounds of Materials 2,000 1,000
Kilowatt Hours 2,000 2,000
Use Activity based costing to determine a unit cost for each product. (Round your final answers to 2 decimal places.)
The number of years n required for an investment at interest rate r to double in value must satisfy (1 + r)n = 2. Using ln 2 = .69 and the approximation ln(1 + r) ≈ r valid for small r, show that n ≈ 69/i, where i is the interest rate percentage (that is, i = 100r). Using the better approximation ln(1+r) ≈ r − 1 2 r2, show that for r ≈ .08 there holds n ≈ 72/i.
Answer:
Showing n=69/i :
n*r=0.69
where r=i/100
n*(i/100)=0.69
Solving the above Equation:
n=69/i (Proved)
Showing n=72/i :
[tex]n*(0.08-\frac{1}{2}(0.08)^2)=0.69\\n* 0.0768=0.69\\n=8.98[/tex]
Above we calculated n=8.98 ≈ 9 (Proved n=72/i)
Explanation:
Given:
[tex](1+r)^n=2[/tex]
ln(2)=0.69
i=100*r means r=i/100
Solution:
Showing n=69/i :
[tex](1+r)^n=2[/tex]
Taking ln on both sides:
[tex]ln(1+r)^n=ln (2)\\n*ln(1+r)=0.69[/tex]
From given data ln(1+r) ≈ r
Above Equation will become:
n*r=0.69
where r=i/100
n*(i/100)=0.69
Solving the above Equation:
n=69/i (Proved)
Showing n=72/i :
As we know i=100*r
when r=0.08,
i=100*0.08=8
[tex]n=72/i =72/8 =9[/tex]
Now:
[tex](1+r)^n=2[/tex]
Taking ln on both sides:
[tex]ln(1+r)^n=ln (2)\\n*ln(1+r)=0.69[/tex]
From given data ln(1+r)≈[tex]r-\frac{1}{2} r^2[/tex]
Above Equation will become:
[tex]n*r-\frac{1}{2} r^2=0.69[/tex]
where r=0.08, Now:
[tex]n*(0.08-\frac{1}{2}(0.08)^2)=0.69\\n* 0.0768=0.69\\n=8.98[/tex]
Above we calculated n=8.98 ≈ 9 (Proved n=72/i)
Firm ML, a non-corporate taxpayer, exchanged residential rental property plus $15,000 cash for 20 acres of investment land with a $200,000 FMV. ML used the straight-line method to compute depreciation on the rental property.
a. Assuming that ML's exchange was negotiated at arm's length, what is the FMV of the rental property?
b. If the adjusted basis of the rental property is $158,000, compute ML's realized and recognized gain. What is the character of the recognized gain?
c. Compute ML's basis in the 20 acres of investment land.
Answer:
A) $215,000
B) realized gain = $57,000
recognized gain = $15,000
C) $158,000
Explanation:
cash exchanged with the rental property ( boot ) = $15,00
A) Assuming ML's exchange is done at arm's length
FMV of property = $200,000 + $15,000 = $215,000
B) Taking adjusted basis of rental property = $158,000
ML's realized gain = FMV of property at arm's length - adjusted basis
= $215000 - $158000 = $57,000
ML's recognized gain = $15,000
The character of the recognized gain is that it will be lower of the boot amount or realized gain and this is because no gain or loss is registered/recognized in the transaction ( exchange ) except with the boot received
C) Determine ML's basis in the 20 acres of investment land
= $158,000
Define the term "compilation engagements" and distinguish between reasonable assurance
engagements and limited assurance engagements.
(8 marks)
Answer: See explanation
Explanation:
A compilation engagement refers to a form of engagement whereby there's an engagement of an outside accountant by a company for the preparation and the presentation of its financial statements.
In a reasonable assurance engagement, the level of assurance is high. Here, there is the likelihood that the prevention or detection of the material misstatements will not be timely.
The limited assurance engagement refers to the assurance engagement risk being reduced to an acceptable level, but where the risk is still more than the reasonable assurance engagement. Here, less evidence is being collected unlike the reasonable assurance engagement.
.
Question 6 of 10
What is an advertising allowance?
O A. A temporary discount intended to encourage shoppers to buy
immediately
OB. A price reduction that a seller offers buyers if they transfer
ownership of a used item when they make a purchase
C. A price reduction that a producer gives to resellers to encourage
them to promote products
OD. A price reduction that a producer gives retailers in exchange for
making shelf space available
SUBMIT
Answer:
C. A price reduction that a producer gives to resellers to encourage
them to promote products
Explanation:
bcuz that's what advertising allowance is
The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $40,000 $50,000 Useful life 7 years 10 years Estimated residual value $3,000 $6,000 Estimated total income over the useful life $24,080 $36,400 Determine the expected average rate of return for each proposal. If required, round to the nearest whole percent. 3D Printer fill in the blank 1 % Truck fill in the blank 2 %
Answer and Explanation:
The computation of the expected average rate of return is shown below:
As we know that
The average rate of return is
= Average net income ÷ average investment
where
Average net income = total income ÷ estimated life
And, the average investment = initial value + estimated residual value ÷ 2
So for 3D printer the average rate of return is
= ($24,080 ÷ 7) ÷ ($40,000 + $3,000) ÷ 2
= $3,440 ÷ $21,500
= 16%
And, for Truck
= ($36,400 ÷ 10 years) ÷ ($50,000 + $6,000) ÷ 2
= $3,640 ÷$28,000
= 13%
reasons as to why we carry out stovk taking
Answer:
The importance of stocktaking is clear. It allows you to regularly monitor and increase gross profit, reduce loss, improve control of allowances, and reduce waste
Explanation:
Answer:
The importance of stocktaking is clear. It allows you to regularly monitor and increase gross profit, reduce loss, improve control of allowances, and reduce waste.
Explanation:
I would like you to analyze our current pricing scheme on our Chevy Tahoe in the Southwest region and give me a recommendation on how we can maximize our revenue. I am interested in maximizing our revenue in order to be able to finance the upgrading of our dealership intranet. Our sales department has estimated the following semiannual demand Q = 25,000 - 1.25PTAH + 1.5PSEQ. Notice that we have included the impact that the Toyota Sequoia has on our Tahoe demand as it currently is our principal rival in the geographic region. We are currently charging $42,500 for our base Tahoe and we notice that Toyota is currently charging $50,000 for its base Sequoia. Let me know what price you would recommend to maximize our revenue as I am hoping there is room to bring our price point more in line with the Sequoia.
Bald Industries disclosed the following minimum rental commitments under non-cancelable operating leases in its 2017 annual report: Minimum operating Amount lease payments (in millions) 2018 $71 2019 46 2020 34 2021 26 2022 20 Total $197 What is the present value of these operating lease payments, assuming a 6% discount rate
Answer:
The present value of these operating lease payments is $172.01 million.
Explanation:
Note: See the attached excel file for the calculation of the net present value (NPV) (in bold red color) of these operating lease payments.
In the attached excel file, the discounting factor for each year is calculated as follows:
Discounting factor = 1 / (100% + Discount rate)^Number of the year
From the attached excel file, we have:
NPV = Net present value = $172.01 million.
A purpose of the Core Inflation Index is _______________. Select the correct answer below: to help consumers understand the overall cost of living from month to month to be a gauge from which to make important government policy changes to help companies make decisions about production and hiring to help people determine global trends in the oil market
Answer:
to be a gauge from which to make important government policy changes.
Explanation:
Inflation can be defined as the persistent general rise in the price of goods and services in an economy at a specific period of time.
Generally, inflation usually causes the value of money to fall and as a result, it imposes more cost on an economy.
Furthermore, when this persistent rise in the price of goods and services in an economy becomes rapid, excessive, unbearable and out of control over a period of time, it is generally referred to as hyperinflation.
Core Inflation Index can be defined as a measure of the change in the price (cost) of goods and services over a specific period of time but excluding the products or items from the energy and food sector. The energy products and food items are excluded because they're transitory i.e having temporary price volatility and as such making their prices change easily.
In Economics, some of the common ways to measure the rate of inflation in a country is through the consumer price index (CPI), gross domestic product deflator (GDP Deflator), personal consumption expenditures price index (PCEPI), employment cost index (ECI), producer price index (PPI), etc.
Hence, a purpose of the Core Inflation Index is to be a gauge from which to make important government policy changes that would have a significant effect or impact on the lives of the citizens of the country.
CII measures the change in the price of goods and services minus the price change of food and energy. It is a tool to make important government policies.
What is Core Inflation Index?CII is the difference between the change in the price of goods and services and with change in the price of food and energy. The food and energy factor is excluded because they are very volatile in nature.
The purpose of CII is to be a gauge from which to make important government policy changes.
Therefore, it can be said the above option aptly describes the purpose of CII.
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Rodriguez Corporation issues 13,000 shares of its common stock for $130,900 cash on February 20.
Prepare journal entries to record this event under each of the following situations :
1) the stock has a $8 par value.
2) The stock has neither par nor stated value
3) The stock has an $4 stated value.
Answer:
1. Dr Cash $130,900
Cr Common stock, $8 par value $104,000
Cr Paid-in capital in excess of par value, common stock $26,900
2. Dr Cash $130,900
Cr Common stock, no-par value $130,900
Dr Cash $130,900
Cr Common stock, $4 stated value $52,000
Cr Paid-in capital in excess of stated value, common stock $78,900
Explanation:
1. Preparation of the journal entries to record the stock has a $8 par value
Dr Cash $130,900
Cr Common stock, $8 par value $104,000
(13,000 shares*$8 par value)
Cr Paid-in capital in excess of par value, common stock $26,900
($130,900-$104,000)
2. Preparation of the journal entries to record The stock has neither par nor stated value
Dr Cash $130,900
Cr Common stock, no-par value $130,900
3. Preparation of the journal entries to record The stock has an $4 stated value
Dr Cash $130,900
Cr Common stock, $4 stated value $52,000
(13,000 shares*$4 par value)
Cr Paid-in capital in excess of stated value, common stock $78,900
($130,900-$52,000)
Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the account. This account is a(n):_________
a) Payroll bank account.
b) Federal depository bank account.
c) Payroll register account.
d) Employee's Individual Earnings account.
e) Employees' bank account.
Answer:
A) Payroll bank account.
Explanation:
A payroll account can be regarded as
separate bank account that is been set up strictly for payroll. To avoid lumping all the expenses of the business in an account, the employee wages will be paid using the payroll bank account.
net wages of the employee will only be deposited in this account.It should be noted that Companies may use a special bank account solely for the purpose of paying employees, by depositing an amount equal to the total employees' net pay into the account each pay period and drawing the employees' payroll checks on the Payroll bank account.
Uses of logical circuit
Answer:
Logic circuits exist to carry out a set of logic actions such as are used for controls for washing machines, tape-recorder drives, computer disk drives, security systems, and a host of industrial control actions. Simple arithmetic actions can also be carried out using logic circuits.
no trespassing signs are an example of owners enforcing their right to
Control property
hi or enjoy property
or own property
or exclude people from your property
or exchange property
Answer:
I guess the ans is their right to exclude people from your property.
Bennett Company produces two products from a joint process: A and C. Joint processing costs for this production cycle are $9,000. Yards Sales price per yard at split-off Disposal cost per yard at split-off Further processing per yard Final sale price per yard A 1,800 $7.00 $4.50 $1.50 $8.00 C 2,600 10.00 6.00 3.50 12.25 If A and C are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Bennett Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product A (round to the nearest dollar)
Answer:
$2,938
Explanation:
Calculation to determine what amount of joint processing cost is allocated to Product A Using sales value at split-off,
First step is to calculate the Total for Product A and C
Product A 1,800* $7.00= $12,600
Product C 2,600* $10.00= $26,000
Total $38,600
($12,600+$26,000)
Now let calculate amount of joint processing cost is allocated to Product A
Joint processing cost is allocated to Product A=$(12,600/38,600)*$9,000
Joint processing cost is allocated to Product A = $2,938
Therefore Using sales value at split-off, what amount of joint processing cost is allocated to Product A is $2,938
Violet Sales Corp, reports the year-end information from 2020 as follows: Sales (35,000 units) $280,000 Cost of goods sold (105,000) Gross margin $175,000 Operating expenses (155,000) Operating income $20,000 Violet is developing the 2020 budget. In 2020 the company would like to increase selling prices by 5.5%, and as a result expects a decrease in sales volume of 15%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. What is budgeted cost of goods sold for 2020
Answer:
COGS= $89,250
Explanation:
Giving the following information:
First, we need to calculate the unitary cost of goods sold:
Unitary COGS= 105,000 / 35,000= $3
Now, the new number of units sold:
Units sold= 35,000*0.85= 29,750
Finally, the COGS for 2020:
COGS= 29,750*3
COGS= $89,250
Which statements about Section 1231 assets are true? Pick all that apply!!
Question options:
If Section 1231 assets are sold and the taxpayer has a realized loss, the loss is a fully deductible ordinary loss
If Section 1231 assets held long-term are sold for a realized gain, the taxpayer has a long term capital gain that is taxed at favorable capital gains rates
If Section 1231 assets held long-term are sold for a realized gain, the taxpayer has a potential long term capital gain that may be taxed at favorable capital gains rates but this result often does not occur because of recapture provisions.
If Section 1231 assets are sold and the taxpayer has a realized loss, the is limited like a capital loss
Answer:
The answer is below
Explanation:
Given that Section 1231 assets are a term that is used to describe the real or depreciable trading property acquired for more than a year. For example, landed property, buildings, etc.
Hence, in this case, the correct answer or statement to the question are:
1. If Section 1231 assets are sold and the taxpayer has a realized loss, the loss is a fully deductible ordinary loss
2. If Section 1231 assets held long-term are sold for a realized gain, the taxpayer has a potential long term capital gain that may be taxed at favorable capital gains rates but this result often does not occur
g Sales and Production Budgets Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget: Rumble Thunder Estimated inventory (units), June 1 284 79 Desired inventory (units), June 30 327 69 Expected sales volume (units): Midwest Region 4,300 4,800 South Region 5,050 4,400 Unit sales price $95 $225 a. Prepare a sales budget.
Answer:
Sonic Inc.a. Sales Budget for the month of June:
Rumble Thunder Total
Midwest Region 4,300 4,800 9,100
South Region 5,050 4,400 9,450
Total units sold 9,350 9,200 18,550
Sales price $95 $225
Expected Sales Revenue $888,250 $2,070,000 $2,958,250
b. Production Budget for the month of June:
Rumble Thunder Total
Desired inventory (units), June 30 327 69 396
Total units sold 9,350 9,200 18,550
Total units available for sale 10,287 9,269 19,556
Estimated inventory (units), June 1 284 79 363
Units to be produced 10,003 9,190 19,193
Explanation:
a) Data and Calculations:
Rumble Thunder
Estimated inventory (units), June 1 284 79
Desired inventory (units), June 30 327 69
Expected sales volume (units):
Midwest Region 4,300 4,800
South Region 5,050 4,400
Unit sales price $95 $225
Computing Depreciation and Accounting for a Change of Estimate Lambert Company acquired machinery costing $110,000 on January 2, 2019. At that time, Lambert estimated that the useful life of the equipment was 6 years and that the residual value would be $15,000 at the end of its useful life. Compute depreciation expense for this asset for 2019, 2020, and 2021 using the: a. straight-line method. Round to the nearest dollar. 2019 Answer 2020 Answer 2021 Answer b. double-declining-balance method. Round to the nearest dollar. 2019 Answer 2020 Answer 2021 Answer c. Assume that on January 2, 2021, Lambert revised its estimate of the useful life to 7 years and changed its estimate of the residual value to $10,000. What would be the new depreciation expense in 2021 for each of the above depreciation methods
Answer: please see answers in explanation column
Explanation:
a) Under straight-line method,
Depreciation expense =(Cost - residual value) ÷ No of years =
= ($110,000 - $15,000) ÷ 6 years = $15,833 which refers to the yearly depreciation expense.
Therefore, the yearly depreciation expense of $15,833 will be applied to the Years 2019, 2020 and 2021.
Total depreciation for all the three years equals
$15,833 x 3 years = $47,499.
(b) The double-declining method
which is 2 x Straight - Line Depreciation Percentage x Book value
Straight - Line Depreciation Percentage
100% ÷ 6 years = 16.67%,
Therefore, Year 2019= 2 x 16.67% x $110,000 = $36,663
Year 2020=2 x 16.67% x $73,337 ($110,000 - $36,663) = $24,443
Year 2021=2 x 16.67% x $48,894 ($73,337 - $24,443) = $16,296
The total of the three years ie 2019 to 2021 =$77,402
(c) Given that in 2021 which is after 2 years, the revised estimated useful life becomes 7 years and the residual value is $10,000
Depreciation Using the straight-line method becomes
Depreciation expense =(Cost - residual value) ÷ No of years
But Net Book Value, which is the cost at the end of 2019
$110,000 - $15,833 x 2 years = $78,334
Therefore, Depreciation expense= ($78,334 - $10,000) ÷ 7 years = $9,762
Also,
Using double-declining method,
Straight - Line Depreciation Percentage = 100% ÷ 7 years = 14.29%,
Year 2021,
2 x 14.29% x $48,894 ($73,337 - $24,443) = $13,969