Answer:Supply
Explanation:
Stagflation is described as a situation in which an economy has both an increase in inflation and a stagnation in economic production. Stagflation was first recognized in the 1970s when an oil shock produced fast inflation and high unemployment in many developed economies.
So, Option D is correct as Due to a combination of rising prices and decreased output, a supply shock can generate stagflation.
The other options are incorrect as:
Option A is incorrect as employment shock is not what causes a high level of inflation and unemployment.
Option B is incorrect as a High level of inflation and unemployment is not caused by Low shock.
Option C is incorrect as A demand shock is a sudden, unanticipated incident that briefly raises or diminishes sales volume or service.
Thus Option D is the correct shock that causes high inflation and unemployment.
For more information about Stagflation refer to the link:
https://brainly.com/question/2703769
Sage Hill Company is negotiating to lease a piece of equipment to MTBA, Inc. MTBA requests that the lease be for 9 years. The equipment has a useful life of 10 years. Sage Hill wants a guarantee that the residual value of the equipment at the end of the lease is at least $4,000. MTBA agrees to guarantee a residual value of this amount though it expects the residual value of the equipment to be only $2,500 at the end of the lease term. If the fair value of the equipment at lease commencement is $100,000, what would be the amount of the annual rental payments Sage Hill demands of MTBA, assuming each payment will be made at the beginning of each year and Sage Hill wishes to earn a rate of return on the lease of 8%
Answer:
$14,621.99
Explanation:
Calculation to determine what would be the amount of the annual rental payments Sage Hill demands of MTBA,
Let X be the annual lease payments
Annuity factor of 8% for 9 years = 6.74664
Discounting factor of 8% at beginning of 9 years = 0.54027
Annual Rental Payments=$100,000 = (X * 6.74664) + ($2,500 * 0.54027)
Annual Rental Payments=$100,000 = (X * 6.74664) + $1350.675
Annual Rental Payments=(X * 6.74664) = $100,000 - 1,350.675
Annual Rental Payments=X = 98,649.325 / 6.74664
Annual Rental Payments=X = $14,621.99
Annual Rental Payments=X = $14,621.99
Therefore, what would be the amount of the annual rental payments Sage Hill demands of MTBA , is $14,621.99
Which of the following is a disadvantage of the sole proprietorship form of ownership?
Question 2 options:
A)
Split responsibility
B)
Unlimited liability
C)
Limited liability
D)
Control over the business
its not unlimited liability that's what I put and I got it wrong
Answer:
D.......... .................... .. . . ...... ..........
Benjamin Company produces two products from a joint process: X and Z. Joint processing costs for this production cycle are $8,000. Yards Sales price per yard at split-off Disposal cost per yard at split-off Further processing per yard Final sale price per yard X 1,500 $6.00 $3.50 $1.00 $7.50 Z 2,200 9.00 5.00 3.00 11.25 If X and Z are processed further, no disposal costs will be incurred or such costs will be borne by the buyer. Refer to Benjamin Company. Using sales value at split-off, what amount of joint processing cost is allocated to Product X (round to the nearest dollar)
Answer:
Benjamin Company
Using sales value at split-off, the amount of joint processing cost allocated to Product X is:
= $2,500.
Explanation:
a) Data and Calculations:
Joint Products X Y Total
Joint processing cost $8,000
Units 1,500 2,200 3,700
Sales price per yard $6.00 $9.00
Sales value at split-off $9,000 $19,800 $28,800
Disposal cost per yard 3.50 5.00
Further processing per yard 1.00 3.00
Final sales price per yard 7.50 11.25
Product X = $2,500 ($8,000 * $9,000/$28,800)
Assume the following information appears in the standard cost card for a company that makes only one product: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 5 pounds $ 11.00 per pound $ 55.00 Direct labor 2 hours $ 17.00 per hour $ 34.00 Variable manufacturing overhead 2 hours $ 2.50 per hour $ 5.00 During the most recent period, the following additional information was available: 20,000 pounds of material was purchased at a cost of $10.50 per pound. All of the material that was purchased was used to produce 3,900 units. 8,000 direct labor-hours were recorded at a total cost of $132,000. The actual variable overhead cost incurred during the period was $25,000. Assuming the company uses direct labor-hours to compute its predetermined overhead rate, what is the variable overhead efficiency variance
Answer:
$500 U
Explanation:
From the given information:
Standard hours allowed = 3900 × 2
= 7800 hours
The variable overhead efficiency variance = ( actual hours - standard hours) × standard variable overhead rate
= (8000 -7800) × $2.50
=(200) × $2.50
= $500 U (unfavourable)
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.46 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,000,000 in annual sales, with costs of $711,000. The project requires an initial investment in net working capital of $220,000, and the fixed asset will have a market value of $300,000 at the end of the project.
1. If the tax rate is 35 percent, what is the project's Year 0 net cash flow?
2. If the required return is 16%, what is the project's NPV?
Answer:
1) initial outlay = $2,460,000 + $220,000 = $2,680,000
2)
depreciation expense year 1 = $819,918
depreciation expense year 2 = $1,093,470
depreciation expense year 2 = $364,326
book value at end of year 3 = $182,286
net cash flow year 1 = [($2,000,000 - $711,000 - $819,918) x 0.65] + $819,918 = $1,124,821.30
net cash flow year 2 = [($2,000,000 - $711,000 - $1,093,470) x 0.65] + $1,093,470 = $1,220,564.50
net cash flow year 3 = [($2,000,000 - $711,000 - $364,326) x 0.65] + $364,326 = $965,364.10
terminal value (year 3) = [($182,286 - $300,000) x .65] + $220,000 = $143,485.90
NPV = -$92,854.95
Hsu Company manufactures two products (A and B) from a joint process that cost $200,000 for the year just ended. Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities, and production costs of further processing are entirely variable and traceable to the products involved. Further information follows. If Processed Further Product Pounds Produced Per-Pound Sales Price Sales Value Separable Cost A 20,000 $ 12 $ 350,000 $ 90,000 B 30,000 8 300,000 60,000 If the joint costs are allocated based on the net-realizable-value method, the amount of joint cost assigned to product A would be:
Answer:
$80,000
Explanation:
Calculation to determine the amount of joint cost assigned to product A would be:
Joint cost assigned to product A =20,000 ÷(20,000 + 30,000)] x $200,000
Joint cost assigned to product A = $80,000
Therefore The the amount of joint cost assigned to product A would be:$80,00
Organizational buyers, when compared to buyers of consumer goods, are........ in number, geographically............. and ............. apt to buy on specifications.
A. Fewer,dispersed,less
B. Fewer, concentrated, less
C.Fewer, concentrated,more
D. Greater, concentrated,less
E. Greater,dispersed,more
Answer:
answer is (D) ok alright
Standard Direct Materials Cost per Unit Crazy Delicious Inc. produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (8,100 bars) are as follows: Ingredient Quantity Price Cocoa 480 lbs. $0.40 per lb. Sugar 150 lbs. $0.60 per lb. Milk 120 gal. $1.70 per gal. Determine the standard direct materials cost per bar of chocolate. If required, round to the nearest cent. $fill in the blank 1 per bar
Answer: $0.06
Explanation:
The standard direct materials cost per bar of chocolate will be:
Cocoa:
Quantity = 480 lbs.
Price = $0.40 per lb
Amount = $192
Sugar:
Quantity = 150 lbs.
Price = $0.60 per lb
Amount = $90
Milk:
Quantity = 120 gal
Price = $1.70 per gal
Amount = $204
Total amount = $192 + $90 + $204 = $486
Since there are 8100 bars of chocolate, the cost per bar will be:
= $486 / 8100
= $0.06
Walter, a single taxpayer, purchased a limited partnership interest in a tax shelter in 1993. He also acquired a rental house in 2019, which he actively manages. During 2019, Walter's share of the partnership's losses was $30,000, and his rental house generated $20,000 in losses. Walter's modified adjusted gross income before passive losses is $130,000.
a. Calculate the amount of Walter's allowable deduction for rental house activities for 2017.
b. Calculate the amount of Walter's allowable deduction for the partnership losses for 2017.
c. What may be done with the unused losses, if anything?
Answer:
a. maximum allowable deduction = $25,000 - [50% x ($130,000 - $100,000)] = $25,000 - (50% x 30,000) = $25,000 - $15,000 = $10,000
b. partnerships passive losses must be deducted from passive gains, since there are no passive gains, there are no deductions = $0
c. passive losses can be carried forward for future deductions against passive gains
Question 4 of 10
Tina was falsely accused of shoplifting in a large retail store. She was
humiliated in front of a large crowd that included a number of her friends and
family members. The store's security officer had deliberately planted
evidence to incriminate Tina and was loudly drawing much attention to the
scene. In the end Tina was cleared of the shoplifting charge and no physical
harm was done to her or her property. However, a court case was still decided
in favor of awarding her damages. On what basis might this be?
A. Compensation can be awarded for general damages, such as
traumatic humiliation, as well as special damages.
B. There is no need for actual harm to be suffered in order for
damages to be awarded.
C. A breach of duty of care toward customers in public stores is
always sufficient to award damages.
O D. The security officer was acting as a "reasonable person," which led
the court to award damages.
Answer: a I think
Explanation:
Answer:
A. Compensation can be awarded for general damages, such as
traumatic humiliation, as well as special damages.Explanation:I just took the test
Explain the purposes for which of control accounts are
prepared in a business organization
The purpose of the control account is to keep the general ledger nice and clean without any details, yet contain the correct balances to be used in the financial statements.
All unethical practices are covered under the law.
True or False
Answer:
False
Explanation:
Law represent the rules and regulations made by the government in order to fulfill them so that each and every individual could work on ethical way, Here only the ethical practices are covered under the law if anyone is not following the rules and regulations proper action should be taken against that person. Also it is compulsory for all to follow the rules and regulations
Therefore the given statement is false
10) At the beginning of the year, Lucy company estimated that the total annual fixed overhead costs would amount to $25,000. Further, Lucy estimated that its volume of production would be 2,000 units of product. Based on these estimates, Lucy computed a predetermined overhead rate that was used to allocate overhead costs to the products made during the year. As predicted, actual fixed overhead costs did amount to $25,000. However, actual volume of production amounted to 2,200 units of product. Based on this information alone: A. Products were overcosted during the year. B. Products were undercosted during the year. C. Products were costed accurately during the year. D. The answer cannot be determined from the information provided.
Answer: A. Products were overcosted during the year.
Explanation:
At the budgeted figures of $25,000 fixed overhead costs and the 2,000 units of production, the predetermined fixed overhead rate is:
= 25,000 / 2,000
= $12.50 per unit
However, the company then produces 2,200 units at the same cost of $25,000 making the actual predetermined fixed overhead rate:
= 25,000 / 2,200
= $11.36 per unit
The actual rate is less than the predetermined rate which means that the products had originally be overcosted by being apportioned higher expenses.
Oriole Company uses a periodic inventory system. Details for the inventory account for the month of January 2017 are as follows: Units Per unit price Total Balance, 1/1/2017 340 $6.0 $2040 Purchase, 1/15/2017 170 ..6 1003 Purchase, 1/28/2017 170 ..6 1054 An end of the month (1/31/2017) inventory showed that 270 units were on hand. How many units did the company sell during January 2017?
Answer:
The number of units sold by the company during January 2017 is 410.
Explanation:
Note: The data in the question are merged together. They are therefore sorted before answering the question as follows:
Units Per unit price Total
Balance, 1/1/2017 340 $6.0 $2040
Purchase, 1/15/2017 170 ..6 1003
Purchase, 1/28/2017 170 ..6 1054
The explanation of the answer is now given as follows:
Total units available for sales during January 2017 = 340 + 170 +170 = 680
Units on hand at end of the month (1/31/2017) = 270
Number of units sold by the company during January 2017 = Total units available for sales during January 2017 - Units on hand at end of the month (1/31/2017) = 680 - 270 = 410
Therefore, the number of units sold by the company during January 2017 is 410.
InterValley Inc. is undergoing major changes at its managerial level. It is also about to appoint a new CEO. Although this information is strictly confidential and has not yet been told to the employees, almost every employee in the company knows about it and is anticipating major changes in the firm in the near future. In this context, the employees at InterValley Inc. gained knowledge of the changes taking place in the company even before receiving any official message through _____.
Answer: the grapevine
Explanation:
The options are:
a.social media
b.the company newsletter
c.the grapevine
d.upward communication
Since we are informed that even though the information about recent happenings in the company is confidential, that every employee in the company knows about what's happening and is anticipating major changes in the firm in the near future, we can say this is an informal means of communication which is also referred to as a grapevine.
Other options given in the question are wrong as they don't fit in into the question. Therefore, the correct answer is "grapevine".
Exercise 14-08 a-b (Video) (Part Level Submission) Cheyenne Corp. incurred the following costs while manufacturing its product. Materials used in product $129,100 Advertising expense $53,200 Depreciation on plant 64,600 Property taxes on plant 16,000 Property taxes on store 8,160 Delivery expense 24,300 Labor costs of assembly-line workers 111,300 Sales commissions 40,100 Factory supplies used 28,700 Salaries paid to sales clerks 57,100 Work in process inventory was $14,500 at January 1 and $16,800 at December 31. Finished goods inventory was $69,500 at January 1 and $46,000 at December 31. Collapse question part (a) Compute cost of goods manufactured. Cost of goods manufactured
Answer:
(a) Cost of goods manufactured = $347,400
(b) Cost of goods sold = $370,900
Explanation:
Note: The requirement of this question is not complete. The complete requirement is therefore provided before answering the question as follows:
(a) Compute cost of goods manufactured.
(b) Compute cost of goods sold.
(a) Compute cost of goods manufactured.
This can be computed as follows:
Cost of goods manufactured = Direct materials used + Labor costs of assembly-line workers + Depreciation on plant + Factory supplies used + Property taxes on plant + Work in Process at January 1 - Work-in-process at December 31 = $129,100 + $111,300 + $64,600 + $28,700 + $16,000 + $14,500 - $16,800 = $347,400
(b) Compute cost of goods sold.
This can be computed as follows:
Cost of goods sold = Finished goods inventory at January 1 + Cost of goods manufactured - Finished goods inventory at December 31 = $69,500 + $347,400 - $46,000 = $370,900
Matching Exercise: Match the type of bond to its definition. Matching Exercise: Match the type of bond to its definition. a) The Catastrophe Bond: (Click to select) b) A Warrant Bond: (Click to select) c) An Income bond: (Click to select) d) A Convertible bond: (Click to select) e) A Put bond: (Click to select)
Answer:
The Catastrophe Bond: covers hurricanes and earthquakes in the U.S.
b) A Warrant Bond: gives the buyer of a bond the right to purchase shares of stock in the company at a fixed price.
An Income bond: states that the bond's coupon payment depends on company income.
c)
Put Bond : allows the holder to force the issuer to buy back the bond at a stated price.
Convertible bond : can be swapped for a fixed number of shares of stock anytime before maturity at the holder's option. .
Explanation:
A catastrophe bond debt instrument usually used by insurance companies. They are usually high yield. The issuer of this type of bond receives money only if specified conditions occur e.g. flood
1. A person risks losing most or all of his or her money in (a) a savings account (b) an elective savings program (c) a speculative investment (d) a conservative investment
Suppose a pizza parlor has the following production costs: $ in labor per pizza, $ in ingredients per pizza, $ in electricity per pizza, $ in restaurant rent per month, and $ in insurance per month. Assume the pizza parlor produces pizzas per month. What is the variable cost of production (per month)? The variable cost of production is $ nothing. (Enter your response as an integer.)
Answer:
the variable cost of production (per month) is $21,000
Explanation:
The computation is shown below:
The variable cost per month is
= Number of pizza produced per month × (labor per pizza + in ingredients per pizza + in electricity per pizza )
= 5,000 × ($3.00 + $1.00 + $0.20)
= 5,000 × $4.20
= $21,000
Hence, the variable cost of production (per month) is $21,000
The End Co issued preferred stock for proceeds of $19,000 during 2014. The company paid dividends of $3,500 on the preferred stock. The company issued a long-term note payable for $75,000 in exchange for a building during the year and bought $16,000 of new equipment. The company also purchased treasury stock for $5,000. The financing section of the statement of cash flows will report net cash inflows of
Answer:
The financing section of the statement of cash flows will report net cash inflows of $10,500
Explanation:
The financing section of the statement of cash flows shows results of cash resulting from capital invested by owners, debt issued and repayments to capital and debt.
Cash Flow from Financing Activities
Preferred Stock Issued $19,000
Dividends Paid ($3,500)
Treasury Stock Purchased ($5,000)
Net Cash Provided by Financing Activities $10,500
After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only individual voting for you. a.If the company has 430,000 shares outstanding and the stock currently sells for $45, how much will it cost you to buy a seat if the company uses straight voting
Answer:
$9,675,045
Explanation:
In order to win the election of the board of directors, voting powers should have half a of the voting power and one vote.
Calculating the cost incurred to buy the voting power:
Total cost = [Number of shares / 2 + 1] * Stock price
Total cost = [430,000/2 + 1] * $45
Total cost = 215,001 * $45
Total cost = $9,675,045
So, it will cost one $9,675,045 to buy a seat if the company uses straight voting.
If the market price is P1: Group of answer choices the firm will break even by producing a quantity of Q2. the firm may make a profit if it can increase the demand for its product. the firm will experience a loss and raise its price to P2. The firm will then break even. the firm will experience a loss since price is less than ATC.
Answer:
the firm will experience a loss since price is less than ATC.
Explanation:
In the case of the perfectly competitive firm when the market price is P_1 so the curve i.e. shown in the attachment represent that the firm would have a loss as the price would be lower than the average total cost i.e. ATC
So according to the given situation, the last option is correct
And the rest of the options would be wrong
Which of the following reflect the balances of prepayment accounts prior to adjustment?
Balance sheet accounts are understated and income statement accounts are understated
Balance sheet accounts are overstated and income statement accounts are overstated
Balance sheet accounts are understated and income accounts are overstated
Balance sheet accounts are overstated and income statement accounts are understated
Answer:
The answer is Balance sheet accounts are overstated and income statement account are understated.
Explanation:
he following information pertains to the January operating budget for Casey Corporation. • Budgeted sales for January $207,000 and February $100,000. • Collections for sales are 60% in the month of sale and 40% the next month. • Gross margin is 35% of sales. • Administrative costs are $10,000 each month. • Beginning accounts receivable is $29,000. • Beginning inventory is $16,000. • Beginning accounts payable is $67,000. (All from inventory purchases.) • Purchases are paid in full the following month. • Desired ending inventory is 30% of next month's cost of goods sold (COGS). At the end of January, budgeted accounts receivable from January sales is ________.
Answer:
the budgeted account receivable is $82,800
Explanation:
The computation of the budgeted account receivable is shown below:
= Budgeted sales × next month sales collections percentage
= $207,000 × 40%
= $82,800
hence, the budgeted account receivable is $82,800'
We simply multiplied the budgeted sales with the next month collection sales percentage so that the budgeted account receivable could come
what is mean by vocational training?
Answer:
Hope this helps
Explanation:
It means a instrustional program or courses that focus on the skills required for a particular job function or trade.In vocational training educates and prepares students for specific careers, disregarding transitional unrelated academic subjects.
Rational and emotional advertising appeals __________ . Group of answer choices represent two distinctive approaches which should never be combined since they divide the focus of a potential consumer's attention counteract each other when combined can be combined wince consumers' purchase decisions are often made on the basis of both rational and emotional motives can only be used together effectively for low-involvement product purchases are most effective when used in conjunction with other advertising appeals
Answer:
can be combined since consumers' purchase decisions are often made on the basis of both rational and emotional motives.
Explanation:
Marketing can be defined as the process of developing promotional techniques and sales strategies by a firm, so as to enhance the availability of goods and services to meet the needs of the end users or consumers through advertising and market research.
Basically, it comprises of all the activities such as, identifying, anticipating set of medium and processes for creating, promoting, delivering, and exchanging goods and services that has value for customers. It typically involves understanding customer needs, building and maintaining healthy relationships with them in order to scale up your business.
Advertisement refers to the promotional multimedia messages designed and developed to make the products or services of a company known to its customers and potential customers. Also, it is generally considered to be one-sided because it focuses on painting a brand as the best and devoid of any negative issue.
Rational and emotional advertising appeals can be combined since consumers' purchase decisions are often made on the basis of both rational and emotional motives.
Buying motive refers to the considerations, urge, emotions or influences that creates the impulse in consumers (customers) to buy a particular good, so as to satisfy their desire or needs.
This ultimately implies that, behind every purchase made by a consumer, there's a consideration, urge or feeling to satisfy that desire or needs l, this is generally referred to as buying motive.
In Economics, buying motives are classified into five (5) main categories and these include;
I. Acquired and Inherent buying motives.
II. Conscious and Dormant buying motives.
III. Physical, Psychological and Sociological buying motives.
IV. Primary and Selective buying motives.
V. Rational and Emotional buying motives.
A rational buying motive is typically based on the consumer's logical and economical consideration of a product in terms of price, durability, need, quality, etc. Thus, it involves a careful consideration of a product rather than feelings as in emotional buying motive.
Match the cost variance component to its definition.
a. Actual quantity
b. Standard quantity
c. Actual price
d. Standard price
1. The expected price
2. The input used to manufacture the quantity of output
3. The amount paid to acquire input
4. The expected input for the quantity of output
Answer:
1. D
2. A
3. C
4. B
Explanation:
Price can be defined as the amount of money that is required to be paid by a buyer (customer) to a seller (producer) in order to acquire goods and services.
In sales and marketing, pricing of products is considered to be an essential element of a business firm's marketing mix because place, promotion and product largely depends on it.
In Accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.
The various types of cost variance components and their definition includes the following;
1. Standard price: the expected price
2. Actual quantity: the input used to manufacture the quantity of output
3. Actual price: the amount paid to acquire input
4. Standard quantity: the expected input for the quantity of output
You are considering two different methods for constructing a new warehouse site. The first method would use prefabricated building segments, would have an initial cost of $6.5 million, would have annual maintenance costs of $150,000, and would last for 25 years. The second alternative would employ a new carbon-fibre panel technology, would have an initial cost of $8.2 million, would have maintenance costs of $650,000 every ten years, and is expected to last 40 years. Both buildings would be in CCA Class 1 (at a rate of 4 percent) and it is expected that each would have a salvage value equivalent to 25 percent of its construction cost at the end of its useful life. The discount rate the firm uses in evaluating projects is 11 percent. The tax rate is 35 percent. What is the annual cost for each option? (Enter the answers in dollars. Do not round your intermediate calculations. Round the final answers to 2 decimal places. Negative answers should be indicated by a minus sign.)
Answer:
The first method would use prefabricated building segments, would have an initial cost of $6.5 million.
Meadow is getting ready to attend college next year. She's thinking about ways to pay for it. Which of these is the best first step for her to take in planning her finances? A) apply for the work-study program at the college B) apply for as many scholarships as possible C) apply for a Perkins Loan Eliminate D) apply for a bank loan
Answer:
its b
Explanation:
yw
Since Meadow has to start attending college the first step to be taken by her has been to apply for as many as scholarships. Thus, option B is correct.
To pay the payment of the college there have been ways that aid financially. The programs may help you earn while studying, or being a bright student the financial aid cab be provided.
The options suits for the planning to pay the expenses are:
A. Apply for the Work-study program at the college:
At the Federal Work-study program, the students in colleges are allowed to work part-time to help them financially.
B. Apply for as many as scholarships:
The scholarships have been the financial aid provided by the government, private organizations, and educational institutes for the students to continue their education.
C. Apply for a Perkins Loan Eliminate:
It has been the low-interest rate scheme provided to the students in the financial need to continue their education. It has been a kind of loan service.
D. Apply for a bank loan:
Bank loan has been the assistance provided by the banks at the interest rate for a specific time of education.
Since Meadow has to start attending college the first step to be taken by her has been to apply for as many as scholarships. Thus, option B is correct.
For more information about financial help, refer to the link:
https://brainly.com/question/9588983
Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet: Cash $14,000 Accounts payable $42,000 Receivables 28,000 Accrued liabilities $28,000 Inventories 56,000 Total liabilities $70,000 Total assets $98,000 Net assets $28,000 Partner B is contributing cash of $77,000. The partners agree that the initial capital of the partnership should be shared equally. Prepare the journal entry to record the capital contributions of the partners using both the Bonus Method and the Goodwill Method.
Answer:
Explanation:
By using the Bonus method for the initial investment:
The overall total capital contributed that can be identified as:
= $28,000 + $77,000
= $105,000
If the unidentifiable assets are not registered, each partner will begin with:
=[tex]\dfrac{ \$ 105,000}{2}[/tex]
= $52,500
Journal Entry: For Bonus Method
Description Debit Credit
Cash 91,000
Receivables 28,000
Inventories 56,000
Accounts Payable 42,000
Accrued Liabilities 28,000
Capital for Partner A, 52,500
Capital for Partner B, 52,500
[The business began with a small initial investment]
Using the Goodwill method for the initial investment:
The value of A's unrecognizable assets is calculated using B's allocation (50 percent)
Total partnership capital [tex]=(\$77000 \times \dfrac{100}{50}) - ( 28000 + 77000)[/tex]
= $49,000
Thus, Goodwill = $49,000
Journal Entry : For Goodwill Method
Description Debit Credit
Cash 91,000
Receivables 28,000
Inventories 56,000
Goodwill 49,000
Accounts Payable 42,000
Accrued Liabilities 28,000
Capital for Partner A, 77,000
Capital for Partner A, 77,000
[The business began with a small initial investment]