Answer:
Option C, remain unchanged, is the right answer.
Explanation:
Option C is correct because the increase in the price level will result in the movement along with the given supply curve but in the question, option A says shifts to the right and in option B it says the shift to the left. Therefore these options are wrong. However, the supply curve remains the same because due to an increase in the price level the supply curve does not shift. Therefore option C will be the right option.
A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange is:
Answer:
Entry to Record this exchange is :
Land $70,000 (debit)
Common Stocks $50,000 (credit)
Share Premium $20,000 (credit)
Explanation:
The Value of the Common Stocks used to settle the land purchase is equivalent to the market value of the land of $70,000.
The Common Stocks have a par value of $10, this means that any amount that is paid in excess of this par value is accounted for in the Share Premium Reserve.
Entry to Record this exchange is :
Land $70,000 (debit)
Common Stocks $50,000 (credit)
Share Premium $20,000 (credit)
Jackie notices everyone wearing Converse sneakers on the first day of school. Ever the fashionista, this will likely affect: Multiple Choice Jackie's income, as she now needs to buy Converse and will have less to spend on other goods. Jackie's preferences for shoes, since she feels as though she needs them now. Jackie's expectations of future prices, since the price of Converse will likely go up because they're getting so popular. the prices of related goods, since other shoes will be less popular and cost less now.
Answer:
Jackie's income, as she now needs to buy Converse and will have less to spend on other goods.
Explanation:
Jackie is a fashionista and so she would respond to trends. Since everyone around her is wearing converse, she would want to wear converses too. so her income would be affected as it would be reduced as she would buy the converse.
A Quality Analyst wants to construct a control chart for determining whether three machines, all producing the same product, are under control with regard to a particular quality variable. Accordingly, he sampled four units of output from each machine, with the following results:
Machine Measurements
Number1 17 15 15 17
Number2 16 25 18 25
Number3 23 24 23 22
What is the estimate of the process mean for whenever it is under control?
a. 16
b. 19
c. 20
d. 21
e. 23
Answer:
c. 20
Explanation:
The summary of the given information shows that a Quality Analyst sampled four units of output from each machine, with the following results:
Machine Measurements
Number 1 17 15 15 17
Number 2 16 25 18 25
Number 3 23 24 23 22
In order to determine the estimate of the process mean for whenever it is under control, we need to find the mean of each Machine and find the average of the three machines together
i.e
For Machine Number 1 ;
Mean = (17+15+15+17)/4
Mean = 64/4
Mean = 16
For Machine Number 2 ;
Mean = (16+25+18+25)/4
Mean = 84/4
Mean = 21
For Machine Number 3;
Mean = ( 23+24+23+22)/4
Mean = 92/4
Mean = 23
∴
The estimate of the process mean for whenever it is under control
= (16 + 21 + 23)/3
The estimate of the process mean for whenever it is under control = 60/3
The estimate of the process mean for whenever it is under control = 20
3. Berkshire Hathaway A shares are trading at $120,000. What split ratio would it need to bring its stock price down to $50
Gould Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pool Activity Rate Setting up batches $ 59.56 per batch Processing customer orders $ 72.96 per customer order Assembling products $ 4.25 per assembly hour Data concerning two products appear below: Product K91B Product F65O Number of batches 89 60 Number of customer orders 39 53 Number of assembly hours 493 900 How much overhead cost would be assigned to Product K91B using the activity-based costing system?
Answer:
$10,241.53
Explanation:
Using the activity-based costing system, Overhead cost for Product K91B would be?
Setting up batches 89 batches x $59.56= $5300.84
Processing customer orders 39 orders x $72.96= $2,845.44
Assembling products 493 hours x $4.25= $2,095.25
Total Overhead cost $10,241.53
Automobile bumpers590 810 Valve covers310 570 Wheels350 620 1,250 2,000 Plating Department Automobile bumpers195 1,150 Valve covers200 700 Wheels195 750 590 2,600 Total1,840 4,600 Required: 1. Determine the single plantwide factory overhead rate, using each of the following allocation bases: (a) direct labor hours and (b) machine hours. Direct labor hour overhead rate$ 130 per direct labor hour Machine hour overhead rate$ per machine hour 2. Determine the product factory overhead costs, using (a) the direct labor hour plantwide factory overhead rate and (b) the machine hour plantwide factory overhead rate. Automobile BumpersValve CoversWheels Direct labor hours$ $ $ Machine hours$ $ $
Answer:
OVERHEAD APPLIED USING DIRECT LABOR
Stamping // Labor Hours // Applied Overhead
bumpers 590 $ 76,700
Valve 310 $ 40,300
Wheels 350 $ 45,500
1250 $ 162,500
Planting // Labor Hours // Applied Overhead
bumpers 195 $25,350
Valve 200 $26,000
Wheels 195 $25,350
590 $76,700
OVERHEAD APPLIED USING MACHINE HOURS
Stamping // Machine Hours // Applied Overhead
bumpers 810 $42,120
Valve 570 $29,640
Wheels 620 $32,240
2000 $104,000
Planting // Machine Hours // Applied Overhead
bumpers 1150 $59,800
Valve 700 $36,400
Wheels 750 $39,000
2600 $135,200
Explanation:
As the overhead rate using labor hours is $130 Then:
Total expected overhead: $130 x 1,840 labor hours = $239,200
Machine Hours overhead rate:
$ 239,200 / 4,600 hours = $52
To get the amount of overhead applied on each product we multiply their use of the cost drive by the overhead rate.
ROI and Residual Income: Basic Computations Watkins Associated Industries is a highly diversified company with three divisions: Trucking, Seafood, and Construction. Assume that the company uses return on investment and residual income as two of the evaluation tools for division managers. The company has a minimum desired rate of return on investment of 10 percent with a 30 percent tax rate. Selected operating data for three divisions of the company follow.
Trucking Division Seafood Division Construction Division
Sales $ 1,200,000 $ 750,000 $ 900,000
Operating assets 600,000 250,000 350,000
Net operating income 116,000 66,000 63,000
(a) Compute the return on investment for each division. (Round answers to three decimal places.)
Trucking ROI =
Seafood ROI =
Construction ROI =
(b) Compute the residual income for each division.
Residual income Trucking Seafood Construction
Net operating income
Minimum level
Residual income
Answer:
a) ROI = Net operating income / Operating assets
Computation of ROI of each division
Division Working ROI
Trucking ROI $116,000 / $600,000 0.1933 or 19.33 %
Seafood ROI $66,000 / $250,000 0.264 or 26.40 %
Construction ROI $63,000 / $350,000 0.18 or 18 %
b) Residual Income = Net operating Income - ( Operating Asssts * Desired ROI )
Where , Minimum level = ( Operating Asssts * Desired ROI )
Minimum level for Trucking = ($600,000*10 %) = $60,000
Minimum level for Seafood = ($250,000*10 %) = $25,000
Minimum level for Construction = ($350,000 * 10 %) = $35,000
Computation of Residual Income for each division
Details Trucking($) Seafood($) Construction($)
Net operating income 116,000 66,000 63,000
Minimum level 60,000 25,000 35,000
Residual income 56,000 41,000 28,000
Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows.
Sales 80,000 units x 45 per unit $3,600,000
Cost of goods sold
- Beginning inventory $__________0
- Cost of goods manufactured (100,000 units x $25 per unit) $2,500,000
- Cost of good available for sale $2,500,000
Ending inventory (20,000 x 25) $500,000
Cost of goods sold $2,000,000
Gross margin $1,600,000
Selling and administrative expenses $580,000
Net income %1,020,000
a. Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2.25 per unit in variable selling and administrative expenses.
b. The company's product cost of $25 per unit is computed as follows:
Direct materials $4 per unit
Direct labor $11 per unit
Variable overhead $4 per unit
Fixed overhead ($600,000/ $100,000 units) $6 per unit
Required:
Prepare an income statement for the company under variable costing.
Answer:
Income statement for the company under variable costing
Sales (80,000 units x $45) $3,600,000
Less Cost of Sales
Beginning inventory $0
Cost of goods manufactured (100,000 units x $19) $1,900,000
Cost of good available for sale $1,900,000
Less Ending inventory (20,000 x $19) ($380,000) ($1,520,000)
Contribution $2,080,000
Less Period Costs
Fixed Manufacturing Overhead ($600,000)
Selling and administrative expenses - Fixed ($400,000)
Selling and administrative expenses - Variable ($180,000)
Net Income / (loss) $900,000
Explanation:
Under Variable Costing.
1.Product cost = Variable Manufacturing Costs Only
Therefore, Product cost = $4 + $11 + $ 4
= $19
2.Period Cost = Fixed Manufacturing Overheads + Non - Manufacturing Costs
Suppose that Best National Bank currently has $150,000 in demand deposits and $97,500 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%.
Reserves=
Required Reserves=
Excess Reserves=
Answer:
Reserves = $52,500
Required Reserves = $15,000
Excess Reserves = $37,500
Explanation:
Reserves of a bank refers to deposits held by the bank that have not be given out as loan. It is deposits minus loan. Reserves of the Best National Bank can therefore be calculated as follows:
Reserves = Demand deposits - Outstanding loans = $150,000 - $97,500 = $52,500
Required Reserves refers to the portion of the deposits of a bank that is legally required by the regulatory to be kept as reserves that cannot be loaned out by the bank. Required Reserves of Best National Bank can be calculated as follows:
Required Reserves = Demand deposits * Reserve requirement = $150,000 * 10% = $15,000
Excess Reserves refers to the reserves held by a bank in excess of its required required reserves. Therefore, excess reserves can be given out as loan by the bank. It is can be calculated as reserve minus required reserve for Best National Bank as follows:
Excess Reserves = Reserves - Required Reserves = $52,500 - $15,000 = $37,500
Based on the above, we have the following for Best National Bank:
Reserves = $52,500
Required Reserves = $15,000
Excess Reserves = $37,500
All of the following items should be considered when setting an export price
except
A. The tariff rate and value-added tax.
B. Transportation costs.
C. Prices of substitutes in foreign markets.
D. Repatriation restrictions
Answer:
D. Repatriation restrictions should not affect the prices of commoditiesExplanation:
Repatriation has to do with the conversion of foreign currency to home based currency. this is done in a bid to carry out international transaction effectively
while these items affects the prices of export
A. The tariff rate and value-added tax.
B. Transportation costs.
C. Prices of substitutes in foreign markets.
International trade promotes economic growth when it allows any two countries to grow (in their combined production) beyond (above) their pre-trade production possibilities curve (PPC).
a. True
b. False
Answer: True
Explanation:
The Production Possibilities Curve (PPC) is meant to illustrate how a country produces goods and services given the limited resources it has. The curve represents the various amounts that have to be traded off of 2 goods to produce more or less of one good.
The Curve shows that it is best that a country produces those goods that is good at producing so that it can produce more of it and then trade with the rest of the world for the goods it isn't too efficient at producing. If both countries involved in the trade are able to grow beyond (above) their pre-trade production possibilities curve then the trade would have promoted economic growth.
__________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products.
Answer: Nontariff barriers
Explanation:
Nontariff barriers are trade barriers that are used whereby the import and export of goods and services are restricted. It should be noted that the restriction is not by tariffs but can include include embargoeds, quotas, sanctions, and levies.
The main reason for trade barriers are to generate revenue for the government and also to protect the local industries.
Periodic interest rates. You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account. Which would you rather have: a daily compounded rate of 0.050%, a weekly compounded rate of 0.355%, a monthly compounded rate of 1.15%, a quarterly compounded rater of 4.25%, a semiannually compounded rate of 7.5%, or an annually compounded rate of 18%? What is the effective annual rate (EAR) of a daily compounded rate of 0.050%?
Answer:
Choose an annually compounded rate of 18%
The effective annual rate (EAR) of a daily compounded rate of 0.050% is 0.05001%.
Explanation:
We need to find the effective annual rate of interest for each nominal interest and compare this for the different alternatives.
The effective annual rate of interest is the annual rate that if compounded once a year would give us the same result as the same result as the interest per period compounded a number of times a year.
Conversion of Nominal to Effective Interest Rate.
1. A daily compounded rate of 0.050%
Use a financial calculator to enter the data
P/YR = 365
Nominal interest = 0.050%
Thus Effective Interest rate = ? 0.05001%
2. A weekly compounded rate of 0.355%
Use a financial calculator to enter the data
P/YR = 52
Nominal interest = 0.355%
Thus Effective Interest rate = ? 0.3556 %
3. A monthly compounded rate of 1.15%
Use a financial calculator to enter the data
P/YR = 12
Nominal interest = 1.15%
Thus Effective Interest rate = ? 1.1561%
4. A quarterly compounded rater of 4.25%
Use a financial calculator to enter the data
P/YR = 4
Nominal interest = 4.25%
Thus Effective Interest rate = ? 4,32%
5. A semiannually compounded rate of 7.5%
Use a financial calculator to enter the data
P/YR = 2
Nominal interest = 7.5%
Thus Effective Interest rate = ? 7.64%
6. an annually compounded rate of 18%
Use a financial calculator to enter the data
P/YR = 1
Nominal interest = 18%
Thus Effective Interest rate = ? 18%
Conclusion :
Choose the option giving the HIGHEST effective annual rate.
Thu, I would rather have an annually compounded rate of 18%.
You purchase a bond with an invoice price of $1,410. The bond has a coupon rate of 6.8 percent, and there are 3 months to the next semiannual coupon date. What is the clean price of the bond? Assume a par value of $1,000.
Answer:
clean price = $1,393
Explanation:
The clean price of the bond does not include any accrued interests. The invoice price = clean price + accrued interests
invoice price = $1,410accrued interests = $1,000 x 0.068 x 3/12 = $17clean price = invoice price - accrued interests = $1,410 - $17 = $1,393
Bee Inc. is working on its cash budget for March. The budgeted beginning cash balance is $55,000. Budgeted cash receipts total $139,000 and budgeted cash disbursements total $134,000. The desired ending cash balance is $80,000. To attain its desired ending cash balance for March, the company needs to borrow:
Answer:
$20,000
Explanation:
The computation of the borrowed amount is shown below:
As we know that
Ending cash balance = beginning cash balance + cash receipts - cash disbursements + cash borrowings
$80,000 = $55,000 + $139,000 - $134,000 +cash borrowings
$80,000 = $194,000 - $134,000 + cash borrowings
So, the borrowing is $20,000
Listed below are year-end account balances (in $millions) taken from the records of Symphony Stores. Debit Credit Accounts receivable-trade 694 Building and equipment 924 Cash-checking 38 Interest receivable 40 Inventory 21 Land 166 Notes receivable (long-term) 496 Petty cash fund 8 Prepaid rent 35 Supplies 12 Trademark 45 Accounts payable-trade 642 Accumulated depreciation 77 Additional paid-in capital 468 Allowance for uncollectible accounts 19 Cash dividends payable 24 Common stock, at par 11 Income tax payable 63 Notes payable (long-term) 836 Retained earnings 306 Deferred revenues 33 TOTALS 2,479 2,479 What would Symphony report as total shareholders' equity?
Answer:
Symphony would report $ 785 million as total shareholders' equity
Explanation:
Use the Balance Sheet to find the total shareholders' equity as Follows :
Assets
Non-Current Assets
Building and equipment 924
Land 166
Notes receivable (long-term) 496
Trademark 45
Accumulated depreciation (77)
Total Non-current assets 1,554
Current Assets
Accounts receivable-trade 694
Allowance for uncollectible accounts (19)
Petty cash fund 8
Prepaid rent 35
Supplies 12
Cash-checking 38
Interest receivable 40
Inventory 21
Total Current Assets 829
Total Assets 2,383
Equity and Liabilities
Equity (Balancing figure) 785
Total Equity 785
Non - Current Liabilities
Notes payable (long-term) 836
Total Non - Current Liabilities 836
Current Liabilities
Accounts payable-trade 642
Cash dividends payable 24
Income tax payable 63
Deferred revenues 33
Total Current Liabilities 762
Total Equity and Liabilities 2,383
Conclusion :
Symphony would report $ 785 million as total shareholders' equity
A granary allocates the cost of unprocessed wheat to the production of feed, flour, and starch. For the current period, unprocessed wheat was purchased for $240,000, and the following quantities of product and sales revenues were produced.
Product Pounds Price per Pound
Feed 100,000 $0.70
Flour 50,000 2.20
Starch 20,000 1.00
How much of the $240,000 cost should be allocated to feed?
a. $24,500.
b. $84,000.
c. $90,000.
d. $70,000.
e. $200,000.
Answer:
$84,000
Explanation:
A granny allocates the costs of unprocessed wheat to production of feed, flour and starch
The unprocessed wheat was bought at the price of $240,000
The first step is to calculate the total amount of the products(feed, flour and starch)
Feed= 100,000×0.70= 70,000
Flour= 50,000×2.0= 110,000
Starch= 20,000×1.0= 20,000
Total cost= 70,000+110,000+20,000
= $200,000
Therefore, the amount that should be allocated to the feed can be calculated as follows
= $70,000/$200,000×$240,000
= 0.35×$240,000
= $84,000
Hence the cost that should be allocated to the feed is $84,000
Choose an example of a type of new company you could start, and then use this company idea to answer the questions below. You might choose to open a hair salon, a babysitting service, a record store, or many other things. This can be the same type of company you chose in assignment 8, or it can be different.
a. Describe the type of company you chose.
b. If you needed to get funding for your company, would you prefer to get debt funding or equity funding? Explain why you would prefer this type.
Answer:
Find the explanation below.
Explanation:
1. The company I chose to operate would be Celebrity Hair Salon. The Celebrity Hair Salon is a standard salon with comfortable furnishings and state-of-the-art equipment intended to tend to the needs of celebrities. Clients are expected to make appointments for their services which the salon strictly adheres to.
2. I would prefer to fund this new business through debt financing. Debt funding entails borrowing funds from Creditors with the intention of paying back at a later time with the attached interest. Equity funding entails giving an investor a certain percentage of the company's returns thus making him a co-owner of the company. This affords him the right to make decisions for the business. Detaching the investor from this business is difficult because it requires buying him out.
I would prefer debt financing because I wish to retain sole ownership of the business. I can also go through some government agencies to obtain funds at lower interest rates. Moreso, there is a fixed debt repayment plan that I can set a target to meet until the debt is paid. Finally, I can regain my freedom after the payment is completed, thus regaining my business and not entitling me to anyone.
Milani, Inc., acquired 10 percent of Seida Corporation on January 1, 2017, for $197,000 and appropriately accounted for the investment using the fair-value method. On January 1, 2018, Milani purchased an additional 30 percent of Seida for $600,000 which resulted in significant influence over Seida. On that date, the fair value of Seida's common stock was $2,000,000 in total. Seida's January 1, 2018 book value equaled $1,850,000, although land was undervalued by $120,000. Any additional excess fair value over Seida's book value was attributable to a trademark with an 8-year remaining life. During 2018, Seida reported income of $300,000 and declared and paid dividends of $110,000. Prepare the 2018 journal entries for Milani related to its investment in Seida.
Answer:
Milani, Inc.
January 1, 2018:
Debit Investment in Seida $600,000
Credit Cash Account $600,000
To record the purchase of an additional 30% of Seida.
December 31, 2018:
Debit Investment in Seida $120,000
Credit Net Income $120,000
To record the share in the net income of Seida.
Debit Cash Account $44,000
Credit Cash Dividend Received $44,000
To record the company's share in the dividend paid by Seida.
Debit Cash Dividend Received $44,000
Credit Investment in Seida $44,000
To record the dividend received from Seida.
Explanation:
The cash dividend received from Seida will reduce Milani, Inc.'s investment value in Seida, just as the 40% share in the net income increased the investment value.
These journal entries have been used to debit and credit accounts as transactions occur. A journal plays an important role in recording transactions in the accounting system as it is usually the initial record of any transaction. It also shows the accounts debited or credited with a short narration that explains each transaction.
Cerrone Inc. has provided the following data for the month of July. The balance in the Finished Goods inventory account at the beginning of the month was $79,000 and at the end of the month was $72,000. The cost of goods manufactured for the month was $361,600. The actual manufacturing overhead cost incurred was $118,400 and the manufacturing overhead cost applied to jobs was $112,000. The adjusted cost of goods sold that would appear on the income statement for July is:
Answer:
$375,000
Explanation:
Unadjusted cost of goods sold = Opening stock of finished goods + Cost of goods sold - Closing stock of finished goods
Unadjusted cost of goods sold = $79,000 + $361,600 - $72,000
Unadjusted cost of goods sold = $368,600
The overhead applied is $112,000 and the actual manufacturing overhead is $118,400. As the actual manufacturing overhead is more than the overhead applied, the overhead is under applied as shown below
Under-applied Overhead = Actual manufacturing overhead - Overhead applied
= $118,400 - $112,000
= $6,400
Now, calculation of the adjusted cost of goods sold is as follow
Adjusted cost of goods sold = Unadjusted cost of goods sold + Under-applied Overhead
= $368,600 + $6,400
= $375,000
Thus, the adjusted cost of goods sold is $375,000
Consider Figure 9.2 on page 205 of our textbook. Suppose P0 is $10 and P1 is $11. Suppose a new firm with the same LRAC curve as the incumbent tries to break into the market by selling 4,000 units of output. Estimate from the graph what the new firm's average cost of producing output would be. If the incumbent continues to produce 6,000 units, how much output would be supplied to the market by the two firms? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn ?
Answer:
The 10,000 units of output that will be supplied by the two firms to the market.
Profit that each firm would earn will be higher than previous.
Explanation:
The firm selling 4,000 units at the price of $10 per unit. If the output is increased to 6,000 units the price will increase to $11 per unit. If the new 6,000 units are produced along with the previous 4,000 units then the total output supplied by the two firms will be 10,000 units (6,000 + 4,000). The supply of goods in the market will increase so price will fall and the revenue for the firms will decline but they can benefit with sales volume and their profit can increase.
The 10,000 units of output will be supplied by the two firms to the market.
The profit that each firm would earn will be higher than the previous.
Calculation of the number of units and profits:Here the firm sells 4,000 units at the price of $10 per unit. And, in the case when the output is increased to 6,000 units the price will increase to $11 per unit.
And, In the case when the new 6,000 units are produced along with the previous 4,000 units so the total output supplied by the two firms will be 10,000 units.
The supply of goods in the market should increase due to which the price will fall and the revenue for the firms will decline however they can benefit with sales volume and their profit can increase.
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The better-off test for evaluating whether a particular diversification move is likely to generate added value for shareholders involves determining whether the proposed diversification move Group of answer choices provides the company with additional resource strengths. provides additional ways to build the entrepreneurial skills of the company's senior managers. spreads stockholders' risks across a greater number of lines of business. has competitively valuable value chain match-ups with the company's present businesses such that its businesses can perform better together than apart. has good potential for increasing the company's rate of return on invested capital.
Answer: Has competitively valuable value chain match-ups with the company's present businesses such that its businesses can perform better together than apart.
Explanation:
The better-off test of diversification is that the company must gain a return that is higher than incremental growth. Incremental growth is usually defined a 1 + 1 = 2 formula and this test argues that Diversification must provide more than this such that the company achieves synergistic growth ( 1 + 1 = 3) which is what happens when different entities work better together than alone.
Diversification should therefore be into an area that will be able to match-up with the company's present businesses such that its businesses can perform better together than apart and produce even greater returns.
P11-45. Statement of Cash Flows (Indirect Method). Artic Company’s income statement and comparative balance sheet follow. ARTIC COMPANY Income Statement For Year Ended December 31, 2019. Sales……………………………………………………………….. $728,000 Cost of goods sold $534,000 Wages expense 190,000 Advertising expense 31,000 Depreciation expense 22,000 Interest expense 18,000 Gain on sale of land (25,000) 770,000 Net loss $ (42,000) ARTIC COMPANY Balance Sheet December 31, 2019 December 31, 2018 Assets Cash……………………………………… 49,000 28,000 Accounts receivable …………. 42,000 50,000 Inventory ……………………………… 107,000 113,000 Prepaid advertising……………….. 10,000 13,000 Property, plant, equipment……. 360,000 222,000 Accumulated depreciation……... (78,000) (56,000) Total assts………………………………. 490,000 370,000 Liabilities and Stockholders’ Equity. Accounts payable……………………….. 17,000 31,000 Interest payable…………………………. 6,000 - Bonds payable……………………………. 200,000 - Common stock………………………….. 245,000 245,000 Retained earnings…………………….. 52,000 94,000 Treasury Sock……………………………. (30,000) - Total liabilities and equity…………. 490,000 370,000 During 2019, Artic sold land for $70,000 cash that had originally cost $45,000. Artic also purchased equipment for cash, acquired treasury stock for cash, and issued bonds payable for cash in 2019. Accounts payable relate to merchandise purchases. Required. a. Compute the change in cash that occurred during 2019 b. Prepare a 2019 statement of cash flows using the indirect method.
Answer and Explanation:
a. The computation of change in cash during 2019 is shown below:-
Change in cash = Cash balance on 31 Dec 2019 - Cash balance on 31 Dec 2018
= $49,000 - $28,000
= $21,000
b. The Preparation of statement of cash flows using the indirect method of 2019 is shown below:-
Artic Company’s
By using the direct method
For the year ended 2019
Particulars Amount
Cash flow from operating activities
Net income/loss ($42,000)
Adjustment to reconcile the net income
Depreciation expenses $22,000
Less: Gain on sales of land ($25,000)
Changes in current assets and current liabilities
Decrease in accounts receivable $8,000
($50,000 - $42,000)
Decrease in Inventory $6,000
($113,000 - $107,000)
Decrease in Prepaid advertising $3,000
($13,000 - $10,000)
Increase in Interest payable $6,000
Less: Decrease in accounts payable ($14,000) $6,000
($31,000 - $17,000)
Net cash provided by operating activities ($36,000)
Cash flow from investing activities
Cash received from sale of land $70,000
Cash paid for equipment ($183,000)
($360,000 - ($222,000 - $45,000)
Cash flow provided by investing activities ($113,000)
Cash flow from financing activities
Cash received from issue of bonds payable $200,000
Cash payment for Treasury stock ($30,000)
Net cash provided by financing activities $170,000
Net Increase (Decrease) in cash $21,000
Cash baalance on 21 Dec 2018 $28,000
Cash balance on 31 Dec 2019 $49,000
The computation of change in cash during 2019 is shown below:-
Change in cash = Cash balance on 31 Dec 2019 - Cash balance on 31 Dec 2018Change in cash = $49,000 - $28,000Change in cash = $21,000Answer B:The Preparation of statement of cash flows using the indirect method of 2019 is shown below:-
Artic Company’s
By using the direct method
For the year ended 2019
Particulars Amount
Cash flow from operating activitiesNet income/loss ($42,000)
Adjustment to reconcile the net income
Depreciation expenses $22,000
Less: Gain on sales of land ($25,000)
Changes in current assets and current liabilities
Decrease in accounts receivable $8,000
($50,000 - $42,000)
Decrease in Inventory $6,000
($113,000 - $107,000)
Decrease in Prepaid advertising $3,000
($13,000 - $10,000)
Increase in Interest payable $6,000
Less: Decrease in accounts payable ($14,000) $6,000
($31,000 - $17,000)
Net cash provided by operating activities ($36,000)
Cash flow from investing activitiesCash received from sale of land $70,000
Cash paid for equipment ($183,000)
($360,000 - ($222,000 - $45,000)
Cash flow provided by investing activities ($113,000)
Cash flow from financing activitiesCash received from issue of bonds payable $200,000
Cash payment for Treasury stock ($30,000)
Net cash provided by financing activities $170,000
Net Increase (Decrease) in cash $21,000
Cash balance on 21 Dec 2018 $28,000
Cash balance on 31 Dec 2019 $49,000
Learn more about Cash Flow:
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Paulo owns a few shares of stock in a large and diversified firm. He realizes that the CEO of the company is responsible for a multi-billion dollar business, but is upset with what he feels is excessive compensation for the chief executive officer, particularly since the firm has reported losses for the past two years. Paulo's concerns are:
Answer: likely to be well-founded since CEO compensation at many U.S. companies has actually increased even when the company performed poorly
Explanation:
The options to the question are:
A. unfounded, since laws in the United States prevent firms from paying large salaries or bonuses to executives when a firm reports a loss.
B. based on an erroneous conclusion, because CEO pay is always based on a formula tied to the company's profits and losses.
C.likely to be well-founded since CEO compensation at many U.S. companies has actually increased even when the company performed poorly.
D. not entirely unfounded, but he needs to realize that the pay received by most chief executives must be reinvested in the company if it's unprofitable for three years in a row.
From the question, we are informed that Paulo owns a few shares of stock in a large and diversified firm na that he noticed that the CEO of the company is responsible for a multi-billion dollar business, but is upset with what he feels is excessive compensation for the CEO particularly since the firm has reported losses for the past two years.
Paulo's concerns are likely to be well-founded since CEO compensation at many U.S. companies has actually increased even when the company performed poorly.
A company manufactures and sells two products: Product A1 and Product C4. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours
Product A1 500 2.0 1,000
Product C4 200 1.0 200
Total direct labor-hours 1,200
The direct labor rate is $27.40 per DLH. The direct materials cost per unit is $281 for Product A1 and $267 for Product C4. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated Expected
Activity Cost Pools Activity Measures Overhead Cost Product C1 Product M2 Total
Labor-related DLHs $558,452 7,200 7,700 14,900
Production orders Orders 75,240 500 600 1,100
General factory MHs 886,410 4,400 4,600 9,000
$1,520,102
The total cost per unit of Product C4 under activity-based costing is closest to: ____________
Answer:
Unitary cost= $4,207.85
Explanation:
Giving the following information:
Product C4:
Production= 200 units
Direct labor hours per unit= 1
Total DLH= 200
The direct labor rate is $27.40 per DLH.
The direct materials cost per unit is $267
Activity Cost Pools - Overhead Cost - Product C4 - Total
Labor-related DLHs $558,452 - 7,700 - 14,900
Production orders Orders $75,240 - 600 - 1,100
General factory MHs $886,410 - 4,600 - 9,000
First, we need to calculate the predetermined overhead rate for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Labor-related= 558,452/14,900= $37.48 per DLH
Production orders= 75,240/1,100= $68.4 per order
General factory= 886,410/9,000= $98.49 per machine hour
Now, we can allocate overhead to C4 as a whole:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Labor-related= 37.48*7,700= $288,596
Production orders= 68.4*600= $41,040
General factory= 98.49*4,600= $453,054
Total= $782,690
Finally, the total cost and cost per unit:
Total cost= 200*267 + 200*27.4 + 782,690
Total cost= $841,570
Unitary cost= 841,570/200= $4,207.85
Scenario: Your direct supervisor is interested in a project you are currently working on, and they have asked to increase the scope to increase the department's goals. How would you respond if your supervisor was not the project sponsor?
Scenario: Your direct supervisor is interested in a project you are currently working on, and they have asked to increase the scope to increase the department's goals. How would you respond if your supervisor was not the project sponsor?
ANSWER:
Take down his/her suggestions. The first thing is to show respect. Accept thoughts and contributions towards that project. Most times a project "sponsor" is not someone who is a professional in the field or discipline that the project is about.
If your direct supervisor has the idea of increasing the scope of the project, take note of his/her reasons and if they will truly bring the achievement of more departmental goals, then relay the idea of expansion to the project sponsor.
Answer:
At this point, the important thing is to remain calm and in control. Your supervisor, like everyone else, is likely to get confused and blame people for things that are not their fault, or even find fault that does not exist.
In that case, you should wait for him to finish speaking, ask for permission to speak and explain how you did your job and show how your supervisor is wrong about the conclusion he made. This must be done calmly and politely, always maintaining respect.
Explanation:
g A constraint to complicated macroeconomic models has been: Group of answer choices that firms do not maximize profits. that agents are not rational. that economists have run out of ideas. a lack of computing power. an insufficient understanding of statistics.
Answer:
a lack of computing power.
Explanation:
Answer the question on the basis o the amounts of all nonlabor resources are fixed.
No. of workers Units of output
0 0
1 40
2 90
3 126
4 150
5 165
6 180
Assume that Number of Us Out Diminishing marginal returns become evident with the addition of the:________,
A) sixth worker.
B) fourth worker.
C) third worker.
D) second worker
Answer:
B
Explanation:
Dinmishing marginal returns occurs when as more units of labour is added, marginal output declines.
marginal output is change in total output as more units of labour are employed.
Marginal output = total output 2 - total output 1
total output = number of workers x units of output
Listed below are certain costs (or discounts) incurred in the purchase or construction of new plant assets. Indicate whether the costs should be expensed or capitalized (included in the cost of the plant assets on the balance sheet.) For costs that should be included in plant assets. Indicate in which category of plant assets (Equipment. Building. or Land) the related costs should be recorded on the balance Sheet.
a. Invoice cost to purchase Equipment
b. Sales tax on new equipment purchased
c. Cost to lay foundation for a new building
d. Repair costs to fix new equipment damaged by the crew that unpacked it
e. Charges incurred to train employees to use new equipment
f. Construction costs for a new building to be used in operations
g. Attorney fees incurred to complete the purchase documents for a new plant warehouse
h. Freight costs to ship the equipment From the manufacturer to the warehouse
Answer:
a. Capitalized : Equipment
b. Expensed
c. Capitalized : Building
d. Expensed
e. Capitalized : Equipment
f. Capitalized : Building
g. Capitalized : Building
h. Capitalized : Equipment
Explanation:
The Cost of Property, Plant and Equipment item according to IAS 16 includes, the Purchase Cost and any cost directly incurred in putting the assets in location and condition intended for use by management.
The costs exclude amounts collected in tax on behalf of third parties
Also not Capital expenditures increase the earning ability of the asset whilst revenue expenditure is the maintenance of such asset.
On December 31, 2021, Larry's Used Cars had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $66,000 and $900, respectively. During 2022, Larry's wrote off $2,275 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,500 at December 31, 2022. Bad debt expense for 2022 would be:
Answer:Bad debts expense = $6,875
Explanation:
A bad debt expense is recognized when a customer cannot pay its financial obligations therefore the account receivable will no longer be collectible
Beginning uncollectible accounts= $900
Ending allowance for uncollectible accounts = $5,500
Amounts written off = $2,275
Ending allowance for uncollectible accounts =Begining uncollectible accounts + current bad debts expense - amounts written off in 2022
$5,500= $900 + bad debts expense - $2,275
current bad debts expense for 2022= $5,500 - $900 + $2,275 = $6,875
Can also be illustrated as
ACCOUNTS
Begining uncollectible accounts $900
Amounts written off (less) - $2,275
Bad debts expense(add) + $6,875
Ending allowance for uncollectible accounts $5,500