Answer:
a. Fixed Assets to long liability ratio is 4.5 times
b. Liabilities to stockholders equity is 0.9 times
Explanation:
(a)
Fixed Assets to long liability determines that how much the fixed asset of the company is as compared to long term liabilities.
Fixed Assets to long liability = Fixed Asset / Long Term Liabilities
Fixed Assets to long liability = $940,500 / $209,000 = 4.5 times
(b)
Ratio of Liabilities to stockholders equity determines the ratio of all the liabilities of the company as compared to stockholders equity.
Liabilities to stockholders equity = Liabilities / stockholders equity
Liabilities to stockholders equity = 658,350 / 731,500 = 0.9 times
Find the future values of these ordinary annuities. Compounding occurs once a year. Do not round intermediate calculations. Round your answers to the nearest cent. $900 per year for 16 years at 4%. $ $450 per year for 8 years at 2%. $ $300 per year for 8 years at 0%. $ Rework parts a, b, and c assuming they are annuities due. Future value of $900 per year for 16 years at 4%: $ Future value of $450 per year for 8 years at 2%: $ Future value of $300 per year for 8 years at 0%: $
Answer:
Ordinary annuities:
$19,642.08
$3,862.34
$2400
Annuities due:
$20,427.76
$3,939.58
$2400
Explanation:
The future values of the annuities can be computed using excel future value formula:
=fv(rate,nper,-pmt,pv,type)
rate is the interest rate
nper is the period of investment stated in years
pmt is the regular investment amount
pv is present worth of each investment which is unknown and taken as zero
type could either be 0 or 1
1 is for annuity due
0 is for ordinary annuity
Ordinary annuities:
$900 per year for 16 years at 4%
=fv(4%,16,-900,0,0)=$19,642.08
$450 per year for 8 years at 2%
=fv(2%,8,-450,0,0)=$3,862.34
$300 per year for 8 years at 0%
=fv(0%,8,-300,0,0)=$2400
annuities due:
$900 per year for 16 years at 4%
=fv(4%,16,-900,0,1)=$20,427.76
$450 per year for 8 years at 2%
=fv(2%,8,-450,0,1)=$3,939.58
$300 per year for 8 years at 0%
=fv(0%,8,-300,0,1)=$2400
The Japan Airlines CEO's behavior has been unordinary according to usual industry practices. He doesn't have a corporate jet, as many CEO's do. He also knocked down his office walls and takes a bus to work. What device is Haruka Nishimatsu trying to exemplify and mold
Answer:
Organizational culture
Explanation:
Remember, the CEO holds a leadership role in which he could influence the culture of the organization.
Therefore, by removing the lavish lifestyle common among other CEOs from himself, Japan Airlines CEO is acting as a role model for other employees, so as to mould an organizational culture where workers avoid excessive spending of company money on personal nonessential things.
Is haccp a state code
Answer:
The Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA) require mandatory HACCP programs for juice and meat as an effective approach to food safety and protecting public health. Meat HACCP systems are regulated by the USDA, while seafood and juice are regulated by the FDA.
Aborkian Co. is forecasting sales of 75,000 units of product for November. To make one unit of finished product, seven pounds of raw materials are required. Actual beginning and desired ending inventories of raw materials and finished goods are:
Questions
Aborkian Co. is forecasting sales of 75,000 units of product for November. To make one unit of finished product, seven pounds of raw materials are required. Actual beginning and desired ending inventories of raw materials and finished goods are:
November 1 November 30
(Actual) (Desired)
Raw materials (pounds) 91,400 86,400
Finished goods 8,500 9,600
(a.) Calculate the number of units of product to be produced during November.
(b.) Calculate the number of pounds of raw materials to be purchased during November
Answer:
Number of units to be produced= 76,100 units
Raw materials to be purchased= 527,700 pounds
Explanation:
Units to be produced
Number of units to be produced = sales budget + closing inventory - opening inventory
= 75,000 + 9,600 - 8,500 = 76,100 units
Number of units to be produced= 76,100 units
Raw materials purchase budget
Raw materials to be purchased = Raw materials to be used + closing inventory of raw materials - opening inventory of raw materials
Raw material usage = production units × standard pounds per unit
= 76,100× 7 =532700 pounds
Raw materials to be purchased = 532,700 +86,400 - 91,400=527700
Raw materials to be purchased= 527,700 pounds
A process produces 5000 units of output that yield $6 per unit. Resources contributed to this output are 200 hours of labor at $15 per hour, materials at $700 and overhead at $300. What is the labor productivity? (assuming that the output is measured by its unit)
Answer:
Labor productivity = 25 units per hour
Explanation:
The labor productivity per hour is the number of output units , per unit of labor input.
Number of units produced = 5,000 units
Number of hours of labor input = 200 hours
∴ Labor productivity = units produced ÷ labor input in hours
Labor productivity = 5,000 ÷ 200 = 25
∴ Labor productivity = 25 units per hour
To recruit new executive and professional, company should mainly depend on_____ *
Answer:
Body physic, skills, and mental capacity.
Two features of internal control are presented in the following sections. Each is followed by a list of four irregularities that occurred in processing data. Identify the one irregularity from each list that would be discovered or prevented by the feature of internal control described.
a. The sum of the balances of the accounts in the customer's ledger is compared at the end of each month with the balance of the accounts receivable account in the general ledger by a person who has no responsibility for maintaining either the general ledger or the customers ledger.
Five hours of services were rendered but the customer was only billed for four hours.
A cash receipt of $750 was recorded correctly in the accounts receivable controlling account but was posted to the customer's ledger as $75.
A bill for services rendered to Cole Co. was erroneously posted to the account of Coleman Co. in the customer's ledger.
No entry was made in the accounting records for services rendered to a customer.
The irregularity that would be discovered or prevented by the feature of internal control described is: ________
b. Both cash and credit charges for services rendered are recorded on prenumbered invoices. At the end of the day, all invoices are accounted for before the duplicate copies of the invoices are routed to the Accounting Department for entry into the accounts and the cash is sent to the Cashier's Department for deposit.
Some charge customers complained that the monthly statements of account did not add all amounts correctly.
Some clerks used incorrect hourly rates in preparing invoices.
Some clerks destroyed duplicate copies of cash invoices and misappropriated the cash.
Some charge customers complained that the monthly statement of account did not indicate credits for payments made.
The irregularity that would be discovered or prevented by the feature of internal control described is: _____________.
Answer: a. A cash receipt of $750 was recorded correctly in the accounts receivable controlling account but was posted to the customer's ledger as $75.
b. Some clerks destroyed duplicate copies of cash invoices and misappropriated the cash.
Explanation:
a. When the person (who not handled this account before) is crosschecking the balance on accounts in the Customers Ledger against the accounts receivable account in the general ledger, they will discover that $750 was recorded correctly in the Accounts Receivables Control Accounts in the General ledger but was recorded at only $75 in the Customers Ledger.
b. The sales clerks would have destroyed only duplicates whilst the originals were still there. Worse still for them is that these duplicates have been accounted for with the Originals. This way when they destroy the duplicates, the company can still confirm with the originals that that cash was indeed paid.
On January 1, Frederic Manufacturing had a beginning balance in WorkminusinminusProcess Inventory of $ 163,000 and a beginning balance in Finished Goods Inventory of $ 23,000. During the year, Frederic incurred manufacturing costs of $ 200,000.
During the year, the following transactions occurred:
Job C- 62 was completed for a total cost of $143,000 and was sold for $158,000.
Job C - 63 was completed for a total cost of $183,000 and was sold for $214,000.
Job C - 64 was completed for a total cost $84,000 but was not sold as of year - end.
The Manufacturing Overhead account had an unadjusted credit balance of $24,000 and was adjusted to zero at year - end. What was the final balance in the Cost of Goods Sold account?
a. $302,000 credit balance
b. $302,000 debit balance
c. $350,000 debit balance
d. $350,000 credit balance
Answer:
$317,000 debit balance
Explanation :
Frederic Manufacturing final balance in the Cost of Goods Sold account:
Cost of Job C 62 158,000
Cost of Job C 63 183,000
Less manufacturing overhead over allocated to production (24,000)
Cost of goods sold 317,000
158,000+183,000
=341,000-24,000
=$317,000
"A registered representative makes it a regular practice to check in with his actively trading customers at least once a week and with his inactively trading customers at least once a month. Some of his less active customers are senior citizens who are getting on in years. He calls one of these elderly clients as part of his regular monthly contacting and finds that the customer does not recognize who he is and appears to be disoriented. The FIRST thing the representative should do is:"
Answer:
contact the firm's compliance department
Explanation:
the first thing the representative should do is to contact the firms compliance department for guidance on how to handle the situation.
The SEC and the FNRA are bodies that have concerns about investors who are old/aging. These people may easily fall prey to scams due to their failing mental capacities. To protect someone like this firms have the responsibility of training their employees to identify diminished mental capacity. FINRA requires that firms have internal process to permit representatives to seek advise from others on what step they are to take.
The transactions listed below are typical of those involving Amalgamated Textiles and American Fashions. Amalgamated is a wholesale merchandiser and American Fashions is a retail merchandiser. Assume all sales of merchandise from Amalgamated to American Fashions are made with terms n/60, and the two companies use perpetual inventory systems. Assume the following transactions between the two companies occurred in the order listed during the year ended December 31.
A. Amalgamated sold merchandise to American Fashions at a selling price of $280,000. The merchandise had cost Amalgamated $195,000.
B. Two days later, American Fashions returned goods that had been sold to the company at a price of $29,500 and complained to Amalgamated that some of the remaining merchandise differed from what American Fashions had ordered. Amalgamated agreed to give an allowance of $4,500 to American Fashions. The goods returned by American Fashions had cost Amalgamated $20,270.
C. Just three days later, American Fashions paid Amalgamated, which settled all amounts owed.
For each of the events (a) through (c), indicate the amount and direction of the effect on Amalgamated Textiles in terms of the following items. (Enter any decreases to account balances with a minus sign.) Prepare the journal entries that Amalgamated Textiles would record. TIP: When using a perpetual inventory system, the seller always makes two journal entries when goods are sold. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer and Explanation:
The amount and direction of the effect is presented below:
1 Transaction Sales Sales Sales Net Cost of Gross Revenues returns allowances Sales goods Profit
sold
(a) (b) (a)-(b)
a. $280,000 $280,000 $195,000
$85,000
b. $29,500 $4,500 -$34,000 -$20,270
$13,730
c. No effect No effect No effect No effect No effect No effect
2. Now the journal entries are as follows
a. Accounts receivable $280,000
To Sales revenues $280,000
(Being sales of account is recorded)
For recording this we debited the account receivable as it increased the assets and credited the revenues as it increase the sales
a-2 Cost of goods sold $195,000
To Merchandise Inventory $195,000
(Being cost of goods sold is recorded)
For recording this we debited the cost of goods sold as it increased the expenses and credited the inventory as it decreased the assets b. Sales allowances and returns ($29,500 + $4,500) $34,000
To Accounts receivable $34,000
(Being Sales allownaces and returns is recorded) For recording this we debited the sales return as it increased it and credited the account receivable as it decreased the assets
b-2 Merchandise Inventory $20,270
To Cost of goods sold $20,270
(Being Cost of goods sold on goods returned)
For recording this we debited the merchandise inventory as it increased the assets and credited the cost of goods sold as it decreased the expenses
c Cash ($280,000 - $34,000) $246,000
To Accounts receivable $246,000
(Being Payment in full is recorded)
For recording this we debited the cash as it increased the assets and credoted the account receivable as it decreased the assets
The following information has been gathered for the GHI Manufacturing Company for its fiscal year ending December 31: Actual manufacturing overhead costs $ 212,500 Actual direct labor hours 54,900 Actual direct labor costs $ 445,000 Estimated manufacturing overhead costs $ 210,000 Estimated direct labor $ 434,000 Estimated direct labor hours 56,000 What is the predetermined manufacturing overhead rate per direct labor hour?
Answer:
The predetermined manufacturing overhead rate per direct labor hour is $3.75 per direct labor hour
Explanation:
Actual manufacturing overhead costs = $ 212,500
Actual direct labor hours = 54,900 hours
Actual direct labor costs = $ 445,000
Estimated manufacturing overhead costs = $210,000
Estimated direct labor hours = 56,000 hours
Predetermined Overhead Rate = Estimated manufacturing overhead costs ÷ Estimated direct labor hours
Predetermined Overhead Rate = $210,000 ÷ 56,000
Predetermined Overhead Rate = $3.75 per direct labor hour
g Romans sells the Regular blend for $3.60 per pound and the DeCaf blend for $4.40 per pound. Romans would like to place an order for the Brazilian and Colombian coffee beans that will enable the production of 1000 pounds of Romans Regular coffee and 500 pounds of Romans DeCaf coffee. The production cost is $0.80 per pound for the Regular blend. Because of the extra steps required to produce DeCaf, the production cost for the DeCaf blend is $1.05 per pound. Packaging costs for both products are $0.25 per pound. Formulate a linear programming model that can be used to determine the pounds of Brazilian Natural and Colombian Mild that will maximize the total contribution to profit.
Romans Food Market, located in Saratoga, New York, carries a variety of specialty foods from around the world. Two of the stores leading products use the Romans Food Market name: Romans Regular Coffee and Romans DeCaf Coffee. These coffees are blends of Brazilian Natural and Columbian mild coffee beans, which are purchased from a distributor from New York City. Because Romans purchases large quantities the coffee beans may be purchased om an as need basis for the price of 10% higher than the market price the distributor pays for the beans. The current market price is $0.47 per pound for Brazilian Natural and $0.62 per pound for Columbian Mild The composition of each coffee blend are as follows:
Bean Regular DeCaf Blend
Brazilian Natural 75% 40%
Columbian Mild 25% 60%
Romans sells the Regular blend for $3.60 per pound and the DeCaf blend for $4.40 per pound. Romans would like to place an order for the Brazilian and Colombian coffee beans that will enable the production of 1000 pounds of Romans Regular coffee and 500 pounds of Romans DeCaf coffee. The production cost is $0.80 per pound for the Regular blend. Because of the extra steps required to produce DeCaf, the production cost for the DeCaf blend is $1.05 per pound. Packaging costs for both products are $0.25 per pound. Formulate a linear programming model that can be used to determine the pounds of Brazilian Natural and Colombian Mild that will maximize the total contribution to profit.
Answer:
[tex]\mathbf{Max \ Z = 2.033 BR + 2.583 BD + 1.868 CR + 2.418 CD}[/tex]
Explanation:
From the given information:
The total revenue can be illustrated as :
Total revenue = 3.6 BR + 4.4 BD + 3.6 CR + 4.4 CD
On the other hand; the total cost of the beans is:
= 1.1 (0.47 BR + 0.47 BD + 0.62 CR + 0.62 CD)
= 0.517 BR + 0.517 BD + 0.682 CR + 0.682 CD
Also; The total production cost is :
= 0.8 BR + 1.05 BD + 0.8 CR + 1.05 CD
The total profit = Total revenue - Total Cost of Beans - Total Production Cost
The total profit = [tex]\left[\begin{array}{}3.6 BR + 4.4 BD + 3.6 CR + 4.4 CD\\- (0.517 BR + 0.517 BD + 0.682 CR + 0.682 CD)\\-(0.8 BR + 1.05 BD + 0.8 CR + 1.05 CD)\end{array}\right][/tex]
The total profit = 2.033 BR + 2.583 BD + 1.868 CR + 2.418 CD
Therefore the linear programming model represents the Objective function of the total profit as:
[tex]\mathbf{Max \ Z = 2.033 BR + 2.583 BD + 1.868 CR + 2.418 CD}[/tex]
g Which of the following statements is correct? Multiple Choice If supply declines and demand remains constant, equilibrium price will fall. If demand increases and supply decreases, equilibrium price will fall. If demand decreases and supply increases, equilibrium price will rise. If supply increases and demand decreases, equilibrium price will fall.
Answer:
If supply increases and demand decreases, equilibrium price will fall.
Explanation:
Equilibrium price is the price at which the price the price a buyer is willing to pay for a good is equal to the price the seller wishes to sell. On a demand-supply graph, it is the point of intersection of demand price and supply price. The quantity at which this happens is the equilibrium quantity.
A decrease in demand will result in the shift of the demand curve inward to the left, at the same time, an increase in supply will result in a shift of the supply curve outward to the right. The resultant effect on the demand-supply curve is decrease in the equilibrium price.
A company is planning to purchase a machine that will cost $54,000 with a six-year life and no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine?
Answer: 3.63 years.
Explanation:
The Payback period of a machine refers to how long it will take to repay it's initial investment. In this case, how long it will take to repay $54,000.
The Net Income is given in the income statement. The Depreciation needs to be added back to this income though because it is a non-cash expense so failing to add it back understates the actual amount of money that the company is getting from the machine.
Total Annual Payback = Net Income + Depreciation
= 5,850 + 9,000
= $14,850
Payback Period is,
= Initial Cost / Annual Inflow
= 54,000 / 14,850
= 3.63 years
Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good in which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be
Answer:
300 radios, 100 televisions in Radioland and 100 radios, 300 televisions in Teeveeland
Explanation:
This question has been answered by in two parts
1. Radioland
Each worker can produce either 4 radios or 1 television
The country has a total of 100 workers
Radioland specializes in radio production because it has comparative advantage in this good, therefore Radioland will only produce radios.
Therefore, the total number of radios it will produce per year
= 4 radios per worker * 100 workers
= 400 radios.
If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, Radioland will end up with
= 400 radios - 100 radios (to Teeveeland) + 100 televisions (from Teeveeland)
= 300 radios + 100 televisions in Radioland.
2. Teeveeland
Each worker can produce either 2 radios or 4 televisions
The country has a total of 100 workers
Teeveeland specializes in television production because it has comparative advantage in this good, therefore teeveeland will only produce television.
Therefore, the total number of televisions it will produce per year
= 4 televisions per worker * 100 workers
= 400 televisions.
If Teeveeland trades 100 televisions to Radioland in exchange for 100 radios each year, Teeveeland will end up with
= 400 televisions - 100 televisions (to Radioland) + 100 radios (from Radioland)
= 300 televisions + 100 radios in Teeveeland.
Suppose Ms. Smith sells her 2018 Honda Fit next year. The original cost of the vehicle was $10,000. During the time she has owned the car she has taken $3,000 dollars of deprecation on it. Ms. Williams sells the car for $9,000. What is resul
The question is incomplete. Here is the complete question
Suppose Ms. Smith sells her 2018 Honda Fit next year. The original cost of the
vehicle was $10,000. During the time she has owned the car she has taken $3,000 dollars
of deprecation on it. Ms. Williams sells the car for $9,000. What is result of the transaction?
A. An ordinary loss of $1,000
B. Long-term capital gain of $2,000
C. An ordinary gain of $2,000
D. An ordinary gain of $6,000
Answer:
An ordinary gain of $2,000
Explanation:
Ms. Smith wants to sell her 2018 Honda fit car next year
The original cost of the car is $10,000
She has incurred $3,000 worth of depreciation on it during the period that she has used the car
She sells the car for $9,000
Her transaction rate can be calculated as follows:
Net value of the car= $10,000-$3,000
= $7,000
Amount of gain realized while selling the car= $9,000-$7,000
= $2,000
Hence Ms. Smith has an ordinary gain of $2,000 after selling her car
Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership by making capital contributions of $75,600, $294,000, and $470,400, respectively. They predict annual partnership net income of $498,000 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $83,600 to Mo, $62,700 to Lu, and $94,500 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $498,000. Mo, Lu, and Barb withdraw $39,300, $53,300, and $69,300, respectively, at year-end.
Answer:
salary allowances of $83,600 to Mo, $62,700 to Lu, and $94,500 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb.
net income $498,000, total distributions:
Mo = $83,600 + (20% x $257,200) = $135,040Lu = $62,700 + (40% x $257,200) = $165,580Barb = $94,500 + (40% x $257,200) = $197,380First we need to close Income Summary account to each partner's capital account:
December 31, 202x
Dr income summary 498,000
Cr Mo Meek, capital 135,040
Cr Lu Ling, capital 165,580
Cr Barb Beck, capital 197,380
then we close the drawings accounts to the capital accounts of each partner:
December 31, 202x
Dr Mo Meek, capital 39,300
Cr Mo Meek, drawings 39,300
Dr Lu Ling, capital 53,300
Cr Lu Ling, drawings 53,300
Dr Barb Beck, capital 69,300
Cr Barb Beck, drawings 69,300
A corporation has 41,770 shares of $35 par stock outstanding that has a current market value of $292 per share. If the corporation issues a 4-for-1 stock split, the market value of the stock will fall to approximately a.$1,168.00 b.$8.75 c.$73.00 d.$257.00
Answer:
c. $73.00 per share
Explanation:
The computation of market value of the stock will fall to approximately is shown below:-
The market value of the stock will fall to approximately = Market value per share ÷ 4-for-1 stock split
= $292 ÷ 4-for-1 stock split
= $73.00 per share
Therefore for computing the market value of the stock will fall to approximately we simply applied the above formula.
Blossom Company sells office equipment on July 31, 2022, for $23,730 cash. The office equipment originally cost $79,700 and as of January 1, 2022, had accumulated depreciation of $36,130. Depreciation for the first 7 months of 2022 is $4,970.
Prepare the journal entries to (a) update depreciation to July 31, 2014, and (b) record the sale of the equipment. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
a. The entries are:
Debit Depreciation expenses for $4,920;
Credit Accumulated depreciation for $4,920.
b. The entries are:
Debit Cash for $23,730
Debit Accumulated depreciation for $41,100
Debit Loss on disposal of equipment for $14,870
Credit Equipment for $79,700
Explanation:
(a) Prepare the journal entries to update depreciation to July 31, 2022.
Note: the correct date to update to is July 31, 2022 not the wrongly stated July 31, 2014 in the question.
The journal entries will look as as follows:
Date Particulars Dr ($) Cr ($)
July 31 Depreciation expenses 4,920
Accumulated depreciation 4,920
To record the updating of depreciation to July 31, 2022.
(a) Prepare the journal entries to record the sale of the equipment.
To prepare this, we need to first calculate the gain or loss on disposal as follows:
Accumulated depreciation till date = $36,130 + $4,970 = $41,100
Net book value = Equipment cost - Accumulated depreciation till date = $79,700 - $41,100 = $38,600
Gain or loss on disposal = Sales proceed - Net book value = $23,730 - $38,600 = $14,870 loss
The journal entries will be as follows:
Date Particulars Dr ($) Cr ($)
July 31 Cash 23,730
Accumulated depreciation 41,100
Loss on disposal of equipment 14,870
Equipment 79,700
(To record disposal of equipment.)
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $ 10 comma 000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic life of 5 years). If your discount rate is 7.0 %, what should you do?
Answer: Lease Equipment as it is cheaper than Buying the Equipment
Explanation:
The better option would be the one with the lower Present Value between Leasing and Buying.
Buying The Equipment
Cost is $40,000 and then there will be a negative Cashflow of $2,000 every year until the 5th year.
Since the Cashflow is constant it can be treated like an annuity. Using the table attached find the PVIFA factor for 5 years at 7%.
PV = -40,000 + (-2,000 * 4.100 ( PVIFA for 5 periods at 7%))
= 40,000 - 8,200
= -$48,200
Cost of Leasing
Leasing would cost $10,000 per year for 5 years.
PV = -10,000 * 4.100 ( PVIFA for 5 periods at 7%)
= -$41,000
You should Lease the Equipment because it is cheaper.
Radison Inc. sells a product for $55 per unit. The variable cost is $35 per unit, while fixed costs are $43,200. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $62 per unit. a. Break-even point in sales units units b. Break-even point if the selling price were increased to $62 per unit units
Answer:
Results are below.
Explanation:
Giving the following information:
Selling price= $55 per unit
Unitary variable cost= $35
Fixed costs= $43,200
A.
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 43,200 / (55 - 35)
Break-even point in units= 2,160 units
B. Selling price= $62
Break-even point in units= 43,200 / (62 - 35)
Break-even point in units= 1,600 units
Answer:
2160 units
1600 units
Explanation:
Break-even point is the fixed cost of $43,200 divided by the contribution margin per unit.
Contribution margin per unit is the selling price per unit minus variable cost per unit.
When price is $55,contribution margin is $20 ($55-$35),hence breakeven point is shown thus:
breakeven point in sales units=$43,200/$20=2,160 units
When price is increased to $62 per unit,contribution margin is $27 ($62-$35)
Breakeven point in sales unit=$43,200/$27=1,600 units
Johnny’s Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $40,000 and will be depreciated according to the 3-year MACRS schedule. It will be sold for scrap metal after 3 years for $10,000. The grill will have no effect on revenues but will save Johnny’s $20,000 in energy expenses. The tax rate is 35%. (LO9-2) a. What are the operating cash flows in each year? b. What are the total cash flows in each year? c. If the discount rate is 12%, should the grill be purchased?
Answer: The answer is given below
Explanation:
For the question, the operating cash flows for each year is gotten by adding the depreciation tax rate to the net of the tax improvement in the operating income. The net of the tax improvement in the operating income.
= $20,000 × (1 - tax rate)
= $20,000 × (1 - 35%)
= $20,000 × (1 - 0.35)
= $20,000 × 0.65
= $13,000
a. The operating cash flows in each year has been attached.
b. The total cash flow will be the value of the operating cash flow added to the cash flow that are associated with investments. At year 0, initial investment was $40,000. After selling the grill at year 3, book value will be $2,964. Therefore, the sale price of the net tax will be:
=(Sales price - tax rate) × (sales price - book value)
=($10,000 - [35% × ($10,000 - $2,964)]
= $10,000 - [0.35 × $7036]
= $10,000 - $2,462.6
= $7,537.4
Total cash flow = $15073.4 + $7537.4
= $22,610.8
c. If the discount rate is 12%, this implies that the grill should be bought due to the fact that the net present value (NPV) of the cash flow is $7,191.8 which has a positive value.
The table has also been attached for further explanation.
Exercise 13-12 Ivanhoe Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, Ivanhoe Company purchased 9,000 premiums at 85 cents each and sold 109,000 boxes of soap powder at $3.10 per box; 48,000 coupons were presented for redemption in 2020. It is estimated that 60% of the coupons will eventually be presented for redemption. Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (To record the premium inventory) (To record the sales) (To record the expense associated with the sale) (To record the premium liability)
Answer: Please see below
Explanation:
1) Journal to record the purchase of 9000 premiums at 85 cents
Year Account Title and explanations Debit Credit
2020 n Inventory of premium $7,650
Cash $7,650
working
Purchase price= Number of units purchased x price per unit
9000 x 0.85= $7,650
2) Journal to record the sale of 109,000 boxes at $3.10
Year Account Title and explanations Debit Credit
2020 Cash $337,900
Sales Revenue $337,900
working
Sale price= Number of units sold x price sold per unit
109,000 boxes x $3.10= $337,900
3) Journal to record the premium expenses
Year Account Title and explanations Debit Credit
2020 Premium Expenses $4,080
Inventory on premium $4080
working
Premium expenses= coupons presented for redemption / number of coupons to redeem premium x price per premium
= 48,000/10 x 0.85 = $4,080
4) Journal to record the premium liability
year Account Title and explanations Debit Credit
2020 Premium Expenses $1,479
Premium liability $1,479
working
Estimated redemption on number of boxes sold = number of boxes sold x probability of redemption= 109,000 x 60 %= $65,400
premium liability of coupons = estimated redemption of premiums - number of coupons already redeemed
= 65,400- 48,000 = 17,400
Cost of premium liabilty = premium liability of coupons /number of coupons per premium x rate per premium
17,400/10 x 0.85 ==$1,479
Sam and Amanda moved from Hawaii to Iowa. Their grocery budget has remained at $100 per month, but the price of their groceries has dramatically gone down due to cost of living! They used to pay $10 for a dozen organic eggs (let Q1 represent the number of dozens of eggs) but now they pay $5. For frozen pizza (Q2) they paid $15 but now they are paying $10. What is Sam and Amanda's new budget constraint?
Answer:
A budget constraint is the amount of goods and service that a person or firm can purchase given their income.
In this case, the budget constraint of Sam and Amanda is determined by their income: that is to say, their monthly grocery budget, which is $100 per month.
Because a dozen organic egg costs $5, and a frozen pizza costs $10, if we suppose that Sam Amanda will spend half their income on each item, their budget constraint will allow them to buy the following amounts:
$50 / $5 = 10 dozen organic eggs
$50 / $10 = 5 frozen pizzas.
Janus Coat Company purchased a delivery truck on June 1 for $30,000, paying $10,000 cash and signing a 6%, 2-month note for the remaining balance. The truck is expected to depreciate $6,000 each year. Janus Coat Company prepares monthly financial statements. Prepare the general journal entry to record the acquisition of the delivery truck on June 1st. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Answer:
Dr delivery truck $30,000
Cr cash $10,000
Cr notes payable $20,000
Explanation:
The acquisition of the truck was consummated partly in cash of $10,000 and notes payable was signed for the remainder of $20,000,hence the appropriate would be to debit delivery truck account with the total cost of $30,000 while the cash account and notes payable are credited with $10,000 and $20,000 respectively.
The interest would be due and recognized later on,not when the truck is freshly acquired.
The Donut Stop acquired equipment for $23,000. The company uses straight-line depreciation and estimates a residual value of $3,400 and a four-year service life. At the end of the second year, the company estimates that the equipment will be useful for four additional years, for a total service life of six years rather than the original four. At the same time, the company also changed the estimated residual value to $2,000 from the original estimate of $3,400.Required:Calculate how much The Donut Stop should record each year for depreciation in years 3 to 6.Cost of the equipment:Less: accumulated depreciation (year 1 & 2):Book value, end of year 2:Less: new residual value:New depreciable cost:Remaining service life:Annual depreciation in years 3 to 6
Answer:
$2,400
Explanation:
Cost of equipment = $23,000
Residual value = $3,400
Useful life = 4 year
Formula for Annual Depreciation will be:
Annual depreciation = (Cost price - Residual value)/Useful life
Hence,
= (23,000 - 3,400)/4
= 19,600/4
= $4,900
The Accumulated depreciation for year 1 and year 2 will be
= 4,900 x 2
= $9,800
Cost of equipment 23,000
Less : Accumulated depreciation for year 1 and year 2 (9,800)
Book value, end of year 2 13,200
Less : Residual value (2,000)
New depreciable cost 11,200
Remaining service life 4
Annual depreciation in year 3 to 6 (11,200/4) $2,400
The year-end adjusted trial balance of Aggies Corporation included the following account balances: Retained Earnings, $212,000; Service Revenue, $810,000; Salaries Expense, $372,000; Rent Expense, $132,000; Interest Expense, $67,000; and Dividends, $42,000. Record the necessary closing entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Retained Earnings, $212,000
At the end, accounts are closed against retained earnings, so no journal entry is needed.
Service Revenue, $810,000
Dr Service revenue 810,000
Cr Income summary 810,000
Salaries Expense, $372,000
Dr Income summary 372,000
Cr Salaries expense 372,000
Rent Expense, $132,000
Dr Income summary 132,000
Cr Rent expense 132,000
Interest Expense, $67,000
Dr Income summary 67,000
Cr Interest expense 67,000
Dividends, $42,000
Dr Retained earnings 42,000
Cr Dividends 42,000
To close income accounts (income summary = $810,000 - $372,000 - $132,000 - $67,000 = $239,000 profit)
Dr Income summary 239,000
Cr Retained earnings 239,000
Power Corporation acquired 100 percent ownership of Scrub Company on February 12, 20X9. At the date of acquisition, Scrub Company reported assets and liabilities with book values of $436,000 and $171,000, respectively, common stock outstanding of $80,000, and retained earnings of $185,000. The book values and fair values of Scrub’s assets and liabilities were identical except for land, which had increased in value by $21,000, and inventories, which had decreased by $6,000.
Required:
Prepare the following consolidation entries required to prepare a consolidated balance sheet immediately after the business combination assuming Power acquired its ownership of Scrub for $266,000.
Answer:
Journal Entry at Acquisition Date:
Debits :
Assets $409,000
Goodwill $28,000
Credit :
Liabilities $171,000
Investment in Subsidiary : Scrub Company $266,000
Explanation:
Power Corporation now has control over Scrub Company after acquiring 100% ownership of Scrub Company. Power Corporation is therefore required to consolidated Financial Statements in terms of IFRS 3.
Assets and Liabilities are Consolidated at their Acquisition Date Fair Values Not Book Values.
The Excess of the Purchase Consideration over the Net Assets Identified at Fair Value is called Goodwill.
Journal Entry at Acquisition Date:
Debits :
Assets ($436,000 + $21,000 - $6,000) $409,000
Goodwill (Balancing figure) $28,000
Credit :
Investment in Subsidiary : Scrub Company $266,000
Suppose that from a new checkable deposit, First National Bank holds 4 million dollars in vault cash, 16 million dollars on deposit with the Federal Reserve, and 18 million dollars in excess reserves. Given this information, we can say First National Bank has ________ million dollars in required reserves.
Answer:
We can say First National Bank has 2 million dollars in required reserves
Explanation:
In order to calculate the required reserves we would have to make the following calculation:
Required reserves = Total reserves - excess reserves = vault cash + deposits with Federal Reserve - excess reserves
vault cash= 4 million dollars
deposits with Federal Reserve= 16 million dollars
excess reserves=18 million dollars
Therefore, Required reserves=4 million dollars+ 16 million dollars-=18 million dollars
Required reserves= 2 million dollars
We can say First National Bank has 2 million dollars in required reserves
Exercise 10-4 Scrap or rework LO P2 A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 22,000 defective units that cost $6 per unit to manufacture. The units can be a) sold as is for $2.00 each, or b) reworked for $4.50 each and then sold for the full price of $8.50 each. What is the incremental income from selling the units as scrap and reworking and selling the units
Answer:
Sales as scrap $44,000
Rework $88,000
Explanation:
Sale as Scrap Rework
Sales of scrap units(22,000×$2.00)
44,000
Sales of Rework units (22,000×$8.50) 187,000
Costs to Rework units(22,000×$4.50) 99,000
Incremental income/loss
44,000 88,000
The company should should REWORK because it has incremental income of 88,000(187,000-99,000) which is higher than that of SCRAP $44,000