Answer:
Dr Liability - Litigation 530,000
Cr Gain - Litigation 530,000
Explanation:
Preparation of any journal entries related to the change.
Based on the information given journal entries related to the change will be:
Dr Liability - Litigation 530,000
Cr Gain - Litigation 530,000
(1,650,000-$1,120,000)
Stevens Company's inventory on March 1 and the costs charged to Work in Process—Department B during March are as follows:
Beginning work in process, 12,000 units, 60% completed $62,400
From Department A, 55,000 units started this period
Direct materials added 115,500
Direct labor incurred 384,916
Factory overhead incurred 138,000
During March, all direct materials were transferred from Department A, the units in process at March 1 were completed, and of the 55,000 units entering the department, all were completed except 6,000 units that were 70% completed. Inventories are costed by the first-in, first-out method.
Required:
Prepare a cost of production report for March.
Solution :
Particulars Direct materials Conversions
Cost per equivalent unit
Total costs for month March in Department B 115500 522915
Total equivalent units 55000 58000
Cost per equivalent unit 2.10 9.0158
So, total conversion cost for March in the Department B
= 384915 + 138000
= $ 522915
Costs charged to production:
Direct Materials Conversion Total cost
Costs costs
Inventory in process, March 1 62400
Cost incurred in March 638415
Total costs accounted by the department 700815
Therefore, the cost incurred in March = 115500 + 384915 + 138000
= $ 638415
Which categories of goods used by ordinary people are most affected by scarcity? Use examples from two of these categories and explain how the scarcity of these goods might arise and how this scarcity would affect most people.
Answer:
nondurable and consumer goods
Explanation:
Nondurable goods are affected by scarcity because their time life is limited. For example, if the capital goods required for its transportation or conservation of ice cream broke down, the product would ruin very easily.
Consumer goods are generally mass consumed. For example clothes are consumed by most of us during the year, but most of them are imported nowadays. Any trade barrier that delayed their supply would cause a rapid shortage.
Catherine Jones has determined the following information about her own financial situation. Her checking account is worth $750 and her savings account is worth $1,900. She owns her own home that has a market value of $91,000. She has furniture and appliances worth $11,000 and a laptop worth $3,300. She has a car worth $11,500. She has recently purchased a mutual fund worth $5,500 and she has a retirement account worth $37,000. What is the total value of her assets
Answer:
$150,450
Explanation:
With regards to the above, her assets are: checking account, savings account, Home, furniture and appliances, laptop, mutual fund, car and retirement account.
= $750 + $1,900 + $91,000 + $11,000 + $3,300 + $5,500 + $37,000
= $150,450
Therefore, the total value of her asset is $150,450
Over the past decade, many American candy companies have opened factories in Mexico and Canada to produce candy. The companies, including Hershey Company, Brach's Confections, and Ferrara Pan, then ship candy back to the United States for sale. Although lower wages in Mexico might explain part of this move, wages in Canada are comparable to U.S. wages. Price floors (price supports) for the sugar industry encouraged American candy companies to move production out of the United States. Describe how the enactment of a sugar price floor impacted the market for candy in the United States, resulting in the movement of manufacturing.
Answer:
The sugar industry in the US is very powerful and has been able to establish trade barriers and import quotas that affect domestic prices. Sugar prices in the US are extremely high compared to prices in any other country, including Canada, Mexico, China, European nation, i.e. American sugar is the most expensive in the world.
Besides imposing trade barriers, the government also imposes a binding price floor. Binding price floors always result in deadweight losses since the quantity demanded is lower than equilibrium. This is why American candy manufacturers move their production overseas. the highest cost in the candy industry is actually sugar, and wherever they decide to relocate their factories it will always be cheaper.
Which of the following is disclosed separately in a statement of cash flows using the indirect method?
A. Cash received from customers
B. Cash paid to employees and other suppliers
C. Increase in retained earnings for the period
D. Net income
Answer:
C. Increase in retained earnings for the period
Explanation:
The Standard that deals with the Presentation and discloser of Cash flow statement (IAS7) requires that the items that do not involve the use of cash must be disclosed separately. That means item C , increases in retained earnings for the period is disclosed separately since it does not involve the use of cash.
A statement of cash flows is refer to the financial statement that shows how changes are made in the balance sheet accounts and how income affect cash and cash equivalents.
A statement of cash flows
Correct option is C.
In indirect method no general cash receipts ad cash payments in operating cash flow is shown, it relates to displaying adjustments in net income, and changes in working capital etc.
In indirect method the accountant adjust various factors like non cash transactions from the net income of the year.
Therefore, Correct option is C.
Learn more about cash flows, refer to the link:
https://brainly.com/question/17143250
(C____________ ) among buyers and sellers prohibits a single buyer or seller can dictate the price of a product or resource because others can undercut that price. The regulatory mechanism of the market system is ( c___________ ). As the result, the ( __________ ________ ) is widely distributed. In other words, competition diffuses ( __________ _________ ) and limits the actions of any single seller or buyer
Answer:
(Competion____________ ) among buyers and sellers prohibits a single buyer or seller can dictate the price of a product or resource because others can undercut that price. The regulatory mechanism of the market system is ( competition___________ ). As the result, the ( _economic_________ ___power_____ ) is widely distributed. In other words, competition diffuses ( __economic________ ___power______ ) and limits the actions of any single seller or buyer.
Explanation:
Economic power refers to the ability of countries, businesses, or individuals to improve their standard of living, making decisions that benefit themselves alone, and reducing the ability of any outside force to reduce their freedom. Competition refers to the selling and buying of goods and services with others, who are also selling and buying the same goods and services. It balances economic power, preventing a single individual from monopolizing the market interaction.
Sorting forms of payments
Q; Sort the forms of payment into the two categories
Answer down below
Have money at time of purchase
- cash
- debit card
- check
Borrow money to make purchase
- credit card
Answer:
Have money at time of purchase.
Cash
For cash to be used to purchase something, the person must already have the required amount of cash in their possession already.
Debit Card.
Debit cards pay for purchases by using funds in the owner's bank account. This means that for a purchase to be processed, the owner must have funds in their account in the first place.
Check
This works much like the debit card above. If one wants to use a check, their bank account needs to have funds at the time of purchase so that the funds can pay for the purchase.
Borrow money to make a purchase
Credit Card
Credit card represent a debt owed to the issuing company that will need to be paid off eventually. This means therefore that whenever you use a credit card to make a purchase, you are borrowing the money used to fund the purchase.
Claremore Industries uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion costs were $414,000. The cost of the ending work in process is:
Answer: $78000
Explanation:
First, we have to calculate the total.costnoer equivalent unit which will be the addition of the material cost per unit and the conversion cost per unit. This will be:
Material cost per unit = $220,000 / (40,000+15,000)
= $220,000 / 55000
= $4
Conversion cost per unit= $414,000 / (40,000 + (15,000*40%)
= $414000 / 46000
= $9
Therefore, total cost per equivalent unit will be: $4 + $9 = $13
Then, the equivlant unit of the ending work in process would be calculated as:
= 15,000 × 40%
= 15000 × 40/100
= 15000 × 0.4
= 6,000
The cost of the ending work in process will then be:
= 6,000 × $13
= $78,000
Sheffield Corp. applies overhead to production at a predetermined rate of 90% based on direct labor cost. Job No. 250, the only job still in process at the end of August, has been charged with manufacturing overhead of $11700. What was the amount of direct materials charged to Job 250 assuming the balance in Work in Process inventory is $45000
Answer:
$20,300
Explanation:
Calculation for What was the amount of direct materials charged to Job 250 assuming the balance in Work in Process inventory is $45000
Direct materials charged to Job 250=$45,000 - ($11,700 / .90) - $11,700
Direct materials charged to Job 250=$45,000 - $13,000- $11,700
Direct materials charged to Job 250= $20,300
Therefore the amount of direct materials charged to Job 250 assuming the balance in Work in Process inventory is $45000 will be $20,300
A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $348,400 and direct labor hours would be 47,000. Actual manufacturing overhead costs incurred were $304,000, and actual direct labor hours were 52,400. The journal entry to apply the factory overhead costs for the year would include a
Answer:
Journal Entry
Debit Work-in-Process $388,284
Credit Manufacturing Overhead $388,284
To record the application of factory overhead costs for the year.
Explanation:
a) Data and Calculations:
Estimated factory overhead costs = $348,400
Estimated direct labor hours = 47,000
Predetermined overhead rate = $7.41 ($348,400/47,000)
Actual overhead costs = $304,000
Actual direct labor hours = 52,400
Applied overhead costs = $388,284 (52,400 * $7.41)
b) The overhead applied to the production for the year will be the actual direct labor hours by the predetermined overhead rate. This yields a cost that is greater than the actual overhead costs, which means that the manufacturing overhead was overapplied. The cause of this situation is the number of actual direct labor hours worked vis-a-vis the actual overhead costs and the predetermined rate.
The amount of joint costs allocated to product DBB-1 using the sales value at split-off method is (calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar): $2,213,640. $939,240. $216,870. $757,800. $447,120.
Answer:
$2,213,640
Explanation:
Calculation for the amount of joint costs allocated to product DBB-1 using the sales value at split-off method
First step is to calculate the total amount
DBB-1= 16,000 units *$25
DBB-1= 400,000
DBB-2= 24,000 units *$35
DBB-2= 840,000
DBB-2= 36,000 units *$55
DBB-2= 1,980,000
Total =3,220,000
(400,000+840,000+1,980,000)
Second step is to calculate the Weight for DBB-3
Weight for DBB-3= 1,980,000 / 3,220,000 Weight for DBB-3=61.49%
Now let calculate the Joint cost for DBB-3
Joint cost for DBB-3=$36,00,000*61.49%
Joint cost for DBB-3=$2,213,640
Therefore The amount of joint costs allocated to product DBB-1 using the sales value at split-off method is $2,213,640
Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.
Statement Consumer Surplus Producer Surplus Neither
Even though I was willing to pay up to $49 for a jersey sweater, I bought a jersey sweater for only $39.
I sold a used laptop for $106, even though I was willing to go as low as $100 in order to sell it.
I sold a watch for $52 on eBay last week. This week, someone offered me $110 for
Answer:
Consumer surplus
Producer surplus
Neither
Explanation:
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.
Consumer surplus = willingness to pay – price of the good
I was willing to pay $49 for the sweater but paid $39, thus the consumer surplus is $10
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
Producer surplus = price – least price the seller is willing to accept
The least amount i was willing to sell my laptop is $100 but i was paid $106 for it. The producer surplus is $6
The third statement is not about consumer or producer surplus. There is no information on the least amount the seller was willing to accept or the highest amount the consumer was willing to sell
Allyson Cooke is a union member and an employee of a company that manufactures surgical equipment. She believes she has a grievance because her supervisor made her work an hour longer than usual for several days and has refused to pay her any overtime. Cooke should contact her _____, who represents union members to management when workers have complaints.
Answer: national union president
Explanation:
Since she wasn't paid for overtime, Cooke should contact her national union president, who represents union members to management when workers have complaints.
The aim of the national union is to seek solution to any challenges that are faced by their members. The union also make sure that their members have a comfortable working environment that is safe and also help on negotiating for better pay.
What are the costs and sources of inefficiency in a barter B apply.) A. Productivity is increased by specialization. B. Each good has only one price. C. There is increased time and effort spent looking for trading partners. D. There is a lack of standardization. E. There is difficulty in accumulating wealth. OF. Transactions costs are almost always high.
Answer:
C)There is increased time and effort spent looking for trading partners.
D)There is a lack of standardization.
E)There is difficulty in accumulating wealth.
Explanation:
barter in a trade can be regarded as a system of exchange that involves exchange of goods and services for another without using money as a medium of exchange. Barter is been considered as 'inefficient' as a result of the needs for 'double coincidence of wants'. For instance in a situation whereby someone is buying particular amount of another's goods, but the payment he/she has is for just one indivisible unit of another good, and the worth is higher than what he/she want to obtain, in this case there won't be barter transaction.
It should be noted that the costs and sources of inefficiency in a barter are;
✓There is increased time and effort spent looking for trading partners.
✓There is a lack of standardization.
✓There is difficulty in accumulating
Suppose that Harry drinks one cup of coffee with his preferred three packs of creamer every day for seven days. What is his utility for that week
Answer:
21
Explanation:
The computation of the utility for that week is as follows:
Given that
There are three packs
Also it is for seven days
u(x,y) = min(3x,y)
C = 1
x = 1
y = 3
So,
u = min(3,3)
= 3
For 7 days it would be
= 7 × 3
= 21
Hence, the utility for that week is 21
In a month, Carlos can produce a maximum of either 30 bushels of pears or 15 bushels of apples, or any linear combination in between. Similarly, Donna can produce a maximum of either 20 bushels of pears or 5 bushels of apples, or any linear combination in between.
a. What is the opportunity cost for Carlos to produce one more bushel of apples in terms of pears?
b. What is the opportunity cost for Donna to produce one more bushel of apples in terms of pears?
c. What would Donna and Carlos agree to as acceptable terms of trade?
Answer:
a. What is the opportunity cost for Carlos to produce one more bushel of apples in terms of pears?
opportunity cost to produce 1 more bushel of apples = 30 / 15 = 2 bushels of pears
b. What is the opportunity cost for Donna to produce one more bushel of apples in terms of pears?
opportunity cost to produce 1 more bushel of apples = 20 / 5 = 4 bushels of pears
c. What would Donna and Carlos agree to as acceptable terms of trade?
Donna has a comparative advantage in the production of pears, so she should produce pears and exchange them for apples produced by Carlos.
Any range between 1-2 pears (higher than 1, but lower than 2) exchanged for every apple would result in mutually beneficial trade.
These are selected 2017 transactions for Swifty Corporation: Jan. 1 Purchased a copyright for $122,750. The copyright has a useful life of 5 years and a remaining legal life of 30 years. Mar. 1 Purchased a patent with an estimated useful life of 4 years and a legal life of 26 years for $51,120. Sept. 1 Purchased a small company and recorded goodwill of $154,200. Its useful life is indefinite. Prepare all adjusting entries at December 31 to record amortization required by the events.
Answer:
Dr Amortization expense $24,550
Cr Copyright asset $24,550
Dr Amortization $10,650
Cr Patent asset $10,650
Explanation:
Preparation of all adjusting entries at December 31 to record amortization required by the events
Based on the information given the adjusting entries at December 31 to record amortization required by the events will be :
Dr Amortization expense $24,550
Cr Copyright asset $24,550
Dr Amortization $10,650
Cr Patent asset $10,650
Calculation for Annual amortization of copyrights
Annual amortization of copyrights = Cost of copyright/Useful life
Annual amortization of copyrights= $122,750/5
Annual amortization of copyrights= $24,550
Calculation for Annual amortization of patent
Annual amortization of patent = Cost of patents/Useful life
Annual amortization of patent= $51,120/4
Annual amortization of patent= $12780
Amortization of patent for 2017 = $12780 x 10/12
= $10,650
The Beckham Company has the following information about their activity cost pools: Activity Cost Pools Total Overhead Cost Total Activity Machine Setups $ 125,000 5,000 setups Customer Orders $ 200,000 1,250 orders Product Design $ 300,000 2,500 product design hours The activity rate for machine setups is ________. multiple choice $125,000 $0.04 per setup $10 per setup $25 per setup
Answer:
$25 per setup
Explanation:
With regards to the above, activity rate is computed as;
= Activity cost pool resources / Activity driver
Activity cost pool resources = $125,000
Activity driver = 5,000
Activity rate for machine setup = $125,000/5,000 = $25 per setup
An insurance company accepts an obligation to pay 10,000 at the end of each year for 2 years. The insurance company purchases a combination of the following two bonds at a total cost of X in order to exactly match its obligation: 1-year 4% annual coupon bond with a yield rate of 5% 2-year 6% annual coupon bond with a yield rate of 5% Calculate X.
Answer:
$18,594.10
Explanation:
Insurance company has to pay $10,000 for two year with rate of 5% since market rate remain same in both the bond.
X = PV (PMT, N, I/Y)
X = PV(10000, 2, 5)
X = 18594.1043
X = $18,594.10
A firm produces truffles by using labor and capital. The price of labor is $10 per unit, and the price of capital is $20 per unit. At current output level, the marginal product of labor is 40 truffles and the marginal product of capital is 60 truffles. To reduce the total cost of producing the current quantity of truffles, how should the firm change its spending on labor and capital
Answer: See explanation
Explanation:
With the information given in the question, the firm should change its spending on labor and capital by increasing its labor and at thesame time, also reducing capital.
This is because since the marginal product of labor is 40 truffles and the price of labor is $10 per unit, it means that 4 truffles/dollar is being spent on labor, while for capital, 3 truffles/dollar is being spent.
Wildhorse Co. began operations on January 2, 2020. It employs 13 people who work 8-hour days. Each employee earns 10 paid vacation days annually. Vacation days may be taken after January 10 of the year following the year in which they are earned. The average hourly wage rate was $18 in 2020 and $19.75 in 2021. The average vacation days used by each employee in 2021 was 9. Wildhorse Co. accrues the cost of compensated absences at rates of pay in effect when earned.
Required:
Prepare journal entries to record the transactions related to paid vacation days during 2020 and 2021.
Answer and Explanation:
The Journal entries are as follows:
On 2020,
Wages expense Dr. $18,720 (13 × 8 hrs × 10 days × $18)
To vacation wages payable $18,720
(being the wages expense is recorded)
On 2021
Wages expense Dr $1,638
Vacation wages payable $16,848 (13 × 8 hrs × 9 days × $18)
To Cash $18,486 (13 × 8 hrs × 9 days × $19.75)
(being cash paid is recorded)
Wages expense Dr. $20,540 (13 × 8 hrs × 10 days × $19.75)
To vacation wages payable $20,540
(being the wages expense is recorded)
Novak Corp. bought equipment on January 1, 2022. The equipment cost $390000 and had an expected salvage value of $35000. The life of the equipment was estimated to be 5 years. The company uses the straight-line method of depreciation. The book value of the equipment at the beginning of the third year would be
Answer:
$177,000
Explanation:
In order to find the book value of the equipment we need to find the amount of depreciation per year. To do this we need to subtract the salvage value from the initial cost and then simply divide by 5 which is the life span of the equipment...
(390,000 - 35,000) / 5 = x
355,000 / 5 = x
71,000 = x
Now we see that the equipment will depreciate by $71,000 per year. In three years the depreciation would be
71,000 * 3 = 213,000
Now we simply subtract this value from the initial cost to get the book value in the third year
390,000 - 213,000 = 177,000
As a long-term investment at the beginning of the 2021 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.'s 20 million shares for $63 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.00 per share. At the end of the year, the fair value of the shares is $59 million. Required:Prepare the appropriate journal entries from the purchase through the end of the yea
Answer:
1. Dr Investment in Nursery supplies $63million
Cr Cash $63million
2. Dr Investment in Nursery supplies $12million
Cr Investment Revenue $12million
3. Dr Cash $6million
Cr Investment in Nursery supplies $6million
4. No Entry
Explanation:
Preparation of the appropriate journal entries from the purchase through the end of the yea
1. Preparation of the journal entry to Record the investment in Nursery Supplies shares.
Dr Investment in Nursery supplies $63million
Cr Cash $63million
(Being To record purchase of 30% shares for $63 million)
2. Preparation of the journal entry to Record the investor's share of net income
Dr Investment in Nursery supplies ($40 million x 30%) $12million
Cr Investment Revenue $12million
(Being To record investor share of investee's net income)
3. Preparation of the journal entry to Record the cash dividends received from Nursery Supplies shares.
Dr Cash (20 million shares x 30% share x $1 per share) $6million
Cr Investment in Nursery supplies $6million
(Being To record receipt of dividend)
4. Preparation of the journal entry to Record fair value adjustment at year-end.
No Entry
The balanced scorecard: Multiple Choice Fails to reflect environmental and social effects of the firm's operations. Helps focus managers' attention to bottom line profits. Is not comprehensive, since it doesn't include all the critical success factors which contribute to competitive success. Is forward looking, stressing nonfinancial measures that can lead to benefits in the future. Is heavily weighted toward the financial critical success factors.
Answer:
Is forward looking, stressing nonfinancial measures that can lead to benefits in the future.
Explanation:
Financial statements can be defined as a document used for the formal communication or disclosure of financial information and statements to present and potential users such as investors and creditors. These includes balance sheet, statement of retained earnings and income statement.
In Financial accounting, Horizontal analysis can be defined as an analysis and evaluation of a financial statement which illustrates or gives information about changes in the amount of corresponding financial statement items, benchmarks or financial ratio over a specific period of time. It is one of the most important technique that is used to measure how a business is doing financially.
Hence, the balanced scorecard is forward looking, stressing nonfinancial measures that can lead to benefits in the future and as such it is a strategic management planning technique.
The name for a variety of methods used to examine how an amount will change if factors involved in predicting that amount change is: Cost analysis. Cost-volume-profit analysis. Sensitivity analysis. Contribution margin analysis. Factor analysis.
Answer:
Sensitivity analysis.
Explanation:
Sensitivity analysis studies how an economic variable would change due to changes in one of the input variables.
Due to the fact that the future is uncertain, it would be wise to accommodate a varying range of scenarios to be able to be well prepared for the future.
Sensitivity analysis involves changing one input at a time to determine how they would affect results.
For example, in determining NPV, there can be different ranges of discount rate
f
An entrepreneur recently purchased Cocoon's, a local deli, on the beach. To operate the business, she estimates that selling and administrative expenses will be $98,510.00 per year and that depreciation will be $20,000.00 per year. As part of her purchase, she took out a bank loan that will require $76,265.00 per year in interest. She anticipates paying a 32.00% tax rate on income. She estimates that the deli will attract 200.00 customers per day. Each customer will spend $12.00 on average. The cost of goods per customer will be $4.50. She will operate the deli 350.00 days per year. What is the projected net profit margin for the deli
Answer:
27%
Explanation:
The computation of the net profit margin is shown below;
As we know that
net profit margin = Net profit ÷ sales
where
net profit is
Particulars Amount
Sales (200 customers × $12 × 350 days) $840,000
Less: cost of goods sold (200 customers × $4.50 × 350 days) -$315,000
Gross profit $525,000
Less:
Selling and admin expense -$98,510
Depreciation expense - $20,000
Bank loan interest -$76,265
Net income before tax $330,225
Less tax at 32% -$105,672
Net income after tax $224,553
Now the net profit margin is
= $224,553 ÷ $840,000
= 27%
1. Friedman distinguishes between the two concepts that (a) businesses really do act in ways to maximize profit and (b) businesses have a moral responsibility (or, as he puts it, a social responsibility) to act to maximize profit. How does he defend the latter position? (See both the Friedman and Sandbu readings)
Explanation:
Friedman defends the position that companies have a social responsibility to act to maximize profit, in the sense that, the primary function of companies is to generate profit. The author goes against the growing opinions in society that companies must have social responsibility, that is, they need to create a positive and sensitive corporate image to please political and society interests and counter or even soften the words and actions its central purpose, which is profit generation. For him, social responsibility cannot be politicized in order to be an obligation of companies, as it limits freedom and interests arising from the business.
Which 4 sections of the Overview screen can be used to perform a high-level review?
A. Company Setup
B. Outstanding Taxes
C. Bank Activity
D. Common issues
E. Transaction Volume
F. Client Mileage
Answer:
Company Setup, Bank Activity, Transaction Volume and Client Mileage
Explanation:
The nature of a company setup is an important aspect to perform a high level review. The set up of the company i.e. Private Ltd. or Public Ltd. or the goal and the motive of the company its operation to earn revenue are important aspects of a high level review. Not only the company set up but also the Banking Activity, Transaction Volume and Client Mileage are also some important areas in which the review takes place. if the company has a large volume of transaction and as well as it is doing a good amount of business with the banks then it can be said that the company is healthy. Moreover the customer satisfaction is an important aspect of a high level review. The following other options are incorrect because they are less important for a high level review.
Data pertaining to the postretirement health care benefit plan of Danielson Delivery Service include the following for the current calendar year: Service cost $ 150,000 APBO, January 1 $ 800,000 Plan assets (fair value), January 1 $ 80,000 Prior service cost (current year amortization, $2,000) $ 90,000 Retiree benefits paid (end of year) $ 90,000 Net gain (current year amortization, $1,000) $ 92,000 Contribution to health care fund (end of year) $ 85,000 Return on plan assets (actual and expected) 10 % Discount rate 8 % Required: 1. Determine Danielson's postretirement benefit expense for the current year.
Answer: $207,00
Explanation:
Postretirement benefit for the year is:
= Service cost + Interest cost + Amortization of prior service cost - Return on plant assets - Amortization of net gain
Interest cost = Discount rate * Actual Projected benefit obligation (APBO)
= 8% * 800,000
= $64,000
Return on plant assets = Return on plan assets (actual and expected)* Plan assets
= 10% * 80,000
= $8,000
Postretirement benefit = 150,000 + 64,000 + 2,000 - 8,000 - 1,000
= $207,000
During 2020, Starnes Corporation developed a patent. Starnes incurred the following costs related to the development of the patent: tests to perfect the use of the patent for production processes, $9,600; research costs in the research laboratory, $33,600; and depreciation on equipment (that has alternative future uses) used in developing the patent, $6,400. In addition, in late December 2020, the company incurred legal fees for the patent registration, $11,200. The expected life of the patent is 20 years. On September 30, 2021, Starnes Corporation defended its patent in court after incurring legal fees of $4,800. The total estimated life of the patent at that time was adjusted to 15 years remaining from September 30, 2021.
Record journal entries for the following items.
a. Patent development and registration costs incurred in 2020.
b. Legal fees paid in 2021.
c. Amortization expense in 2021.
d. Amortization expense in 2022c. Amortization expense in 2021.
Answer:
a. Patent development and registration costs incurred in 2020.
Dr Patent 11,200 (only patent registration fees)
Dr Research and development expense 49,600
Cr Accumulated depreciation 6,400
Cr Cash 54,400
b. Legal fees paid in 2021.
Dr Patent 4,800
Cr Cash 4,800
c. Amortization expense in 2021.
Dr Amortization expense 607.50
Cr Patent 607.50
($11,200/20 x 9/12) + ($15,000/20 x 3/12) = $607.50
d. Amortization expense in 2022
Dr Amortization expense 750
Cr Patent 750
a. Patent development and registration costs incurred in 2020.
Dr Patent 11,200
Dr Research and development expense 49,600
Cr Accumulated depreciation 6,400
Cr Cash 54,400
b. Legal fees paid in 2021.
Dr Patent 4,800
Cr Cash 4,800
c. Amortization expense in 2021.
Dr Amortization expense 607.50
Cr Patent 607.50 ($11,200/20 x 9/12) + ($15,000/20 x 3/12)
d. Amortization expense in 2022
Dr Amortization expense 750
Cr Patent 750
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