Answer:
D. Promotes a culture of compliance and ethics throughout the organization
Explanation:
Every negative actions that conducted by a member of company will expose the company to the risk of lawsuits.
To prevent this from happening, the company often hire compliance and ethics professional to ensure that the employees are following a set of procedures that prevent them from violating the social norms.
Example of program that conducted by compliance and ethics professional are: providing guidelines to avoid sexual harassment, providing training to deal with conflicts against the customers, etc.
Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 1,500 units of Product A and 1,500 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $87,630. The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with estimated overhead costs and expected activity as follows:
Expected Activity
Activity Cost Pool Estimated Overhead Costs Product A Product B Total
Activity 1 $ 41,400 1,000 500 1,500
Activity 2 15,720 800 400 1,200
General Factory 30,510 600 300 900
Total $ 87,630
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.)
The overhead cost per unit of Product B under the activity-based costing system is closest to:_________
a. $42.90
b. $9.10
c. $21.30
d. $63.92
Answer:
Results are below.
Explanation:
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
Activity 1= 41,400/1,500= $27.6 per unit of activity
Activity 2= 15,720/1,200= $13.1 per unit of activity
General Factory= 30,510/900= $33.9 per direct labor hour
Now, we can allocate overhead to product B:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Activity 1= 27.6*500= $13,800
Activity 2= 13.1*400= $5,240
General Factory= 33.9*300= $10,170
Total allocated overhead= $29,210
Unitary allocated overhead= 29,210/1,500= $19.47
The manager of ABC, Inc decides to order the same number of widgets this year as last year. The manager has made a(n) ________ decision.
Answer: Structured decision
Explanation:
From the question, we are informed that the manager of ABC, Inc decides to order the same number of widgets this year as last year. This implies that the manager has made a structured decision.
Structured decisions occurs when there are already certain processes in place which will be vital in handling of a particular situation. People in organizations use structured decisions when the situations they face are common or reccuring ones. They're repetitive, hence there are necessary processes in place to handle them.
The City of Waterville applied for a grant from the state government to build a pedestrian bridge over the river inside the city’s park. On May 1, the city was notified that it had been awarded a grant of up to $200,000 for the project. The state will provide reimbursement for allowable expenditures. On May 5, the special revenue fund entered into a short-term loan with the General Fund for $200,000 so it could start bridge construction. During the year, the special revenue fund expended $165,000 for allowable bridge construction costs, for which it submitted documentation to the state. Reimbursement was received from the state on December 13, 2017.
Required:
For the special revenue fund, provide the appropriate journal entries, if any, that would be made for the following.
a. May 5, 2017, loan from General Fund.
b. During FY 2017, bridge expenditures and submission of reimbursement documentation.
c. December 13, 2017, receipt of the grant reimbursement funds.
d. December 31, 2017, adjusting and closing entries.
Answer:
The City of Waterville
a. May 5:
Debit Cash $200,000
Credit InterFund Loan Payable $200,000
To record the loan from the general fund.
b. Debit Bridge Expenditure $165,000
Credit Vouchers Payable $165,000
To record the bridge expenditure for the year.
Debit Grant Receivable from State $165,000
Credit Grant Revenue $165,000
To record the submission of documentation for reimbursement.
c. Debit Cash $165,000
Credit Grant Receivable from State $165,000
To record the receipt of grant reimbursement.
d. Debit Revenues $165,000
Credit Expenditures $165,000
To record the revenues received and the expenditures.
Explanation:
The City of Waterville's application does not attract any journal entries. No journal entries are also made on May 1 when the city was notified of the grant award. Journal records are made from May 5 when the short-term loan arrangement was concluded with the General Fund.
On July 1, 2020, Buffalo Inc. made two sales.
1. It sold land having a fair value of $904,290 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,422,914. The land is carried on Buffalo's books at a cost of $591,300.
2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $408,830 (interest payable annually).
Buffalo Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest.
Required:
Record the two journal entries that should be recorded by Vaughn Inc. for the sales transactions above that took place on July 1, 2020.
Answer:
Journal 1
July 1
Note Receivable $1,422,914 (debit)
Profit and Loss $851,614 (credit)
Land $591,300 (credit)
Sale of land on credit
Journal 2
July 1
Note Receivable $861,394 (debit)
Service Revenue $861,394 (credit)
Rendered Services on credit
Explanation:
Journal 1
Sale of land on credit :
De-recognise the Land in Buffalo Inc. books at cost, Recognise the Assets of Note Receivable and a Profit from sale. Proceeds are measured at the future value
Future Value :
PV = $1,422,914
n = 4
pmt = $0
p/yr = 1
fv = ?
Using a financial calculator the future value is $1,422,914.
Journal 2
Rendered Services on credit :
Recognize the Assets of Note Receivable and Recognise the Revenue at the future value.
Future Value :
pv = - $408,830
n = 8
pmt = 3% × $408,830 = $12,264.90
i = 12%
p/yr = 1
fv = ?
Using a financial calculator, the future value is $861,394
Lemon Corporation generated $324,600 of income from ordinary business operations. It also sold several assets during the year. Compute Lemon’s taxable income under each of the following alternative assumptions about the tax consequences of the asset sales.
a. Lemon recognized a $5,500 capital gain and a $7,400 net Section 1231 loss.
b. Lemon recognized a $6,500 capital loss and a $4,700 net Section 1231 gain.
c. Lemon recognized a $2,500 capital gain, a $3,900 capital loss, and a $3,000 net Section 1231 gain.
d.Lemon recognized $4,000 of depreciation recapture, a $2,000 Section 1231 gain, and a $4,200 Section 1231 loss.
Answer:
a. Lemon’s taxable income = $322,700
b. Lemon’s taxable income = $324,600
c. Lemon’s taxable income = $326,200
d. Lemon’s taxable income = $326,400
Explanation:
Before the questions are answered, the provisions of section 1231 of the Internal Revenue Service (IRS) rules are quoted as follows:
- If you have a net section 1231 loss, it is an ordinary loss.
- If you have a net section 1231 gain, it is ordinary income up to the amount of your unrecaptured section 1231 losses from previous years. The rest, if any, is a long-term capital gain.
Therefore, net section 1231 loss which is an ordinary loss is deducted from ordinary business operations to obtain taxable income.
Also, we describe the following:
Taxable income can be described as the amount of income that is employed to calculated the amount of tax that is payable to the government by an individual or a company in a particular tax year. It is obtained after making all required additions and allowable deductions.
Capital gain can be described as an increase in the value of a capital asset which is realized when the asset is sold. For tax purposes, capital gain is added to the income from ordinary business operations to obtain taxable income.
Capital loss can be described as a decrease in the value of a capital asset which is recognised when the asset is sold. For tax purposes, capital loss is deducted from the income from ordinary business operations to obtain taxable income.
We therefore proceed as follows:
a. Lemon recognized a $5,500 capital gain and a $7,400 net Section 1231 loss.
From the question, we have the following:
Income from ordinary business operations = $324,600
Capital gain recognised = $5,500
Net Section 1231 loss recognised = $7,400
Based on the explanation provided above, Lemon’s taxable income under this scenario is therefore calculated as follows:
Lemon’s taxable income = Income from ordinary business operations + Capital gain recognised - Net Section 1231 loss recognised = $324,600 + $5,500 - $7,400 = $322,700
b. Lemon recognized a $6,500 capital loss and a $4,700 net Section 1231 gain.
From the question, there is nothing related past five years stated and it is therefore assumed that there is no net section 1231 loss in the past five years.
As result, the total of $4,700 net Section 1231 gain is regarded as a capital gain and it is set-off against the $6,500 capital loss as follows to obtain the non-deductible expense as follows:
Non-deductible expense = $6,500 - $4,700 = $1,800
Since there is nothing deductible again, Lemon’s taxable income under this scenario is therefore equal to the income from ordinary business operations of $324,600. That is,
Lemon’s taxable income = $324,600
c. Lemon recognized a $2,500 capital gain, a $3,900 capital loss, and a $3,000 net Section 1231 gain.
Since no net section 1231 loss in the past five years is indicated here, the $3,000 net Section 1231 gain will be treated as a long-term capital gain.
Based on the provisions of section 1231 of the Internal Revenue Service (IRS) rules quoted above, non-deductible expense is calculated by deducting the $3,900 capital loss to the extent of the $2,500 capital gain as follows:
Non-deductible expense = $3,900 - $2,500 = $1,400
Since the $3,000 net Section 1231 gain has to be treated as a long-term capital gain, the $1,400 will be deducted from it obtain the net capital gain as follows:
Net capital gain = $3000 - $1400 = $1600
Lemon’s taxable income under this scenario is therefore calculated by adding the $1,600 net capital gain to the $324,600 income from ordinary business operations as follows:
Lemon’s taxable income = $324,600 + $1600 = $326,200
d. Lemon recognized $4,000 of depreciation recapture, a $2,000 Section 1231 gain, and a $4,200 Section 1231 loss.
We have the following:
Section 1231 loss = $4,200
Section 1231 gain = $2,000
Therefore, we have:
Net section 1231 loss = Section 1231 loss - Section 1231 gain = $4,200 - 2,000 = $2,200
This net section 1231 loss of $2,200 is therefore treated as ordinary loss as already stated in the provisions of section 1231 of the Internal Revenue Service (IRS) rules quoted above and deducted from the $324,600 income from ordinary business operations.
In addition, the depreciation recapture of $4,000 will be treated as ordinary income and it will be added to the $324,600 income from ordinary business operations.
Lemon’s taxable income under this scenario is therefore calculated as follows:
Lemon’s taxable income = Income from ordinary business operations + Depreciation recapture - Net section 1231 loss = $324,600 + $4,000 - $2,200 = $326,400
So you want to finance a car for $4,840. Let’s say we offer you a 4.5% interest rate on a 2-year loan and 6% on a 5-year loan. Enter this info into the calculator to see your monthly and total cost by loan term.
Financing Amount
$4840
Correct
Interest Rate on 2-Year Loan
Interest Rate on 5-Year Loan
Answer:
Interest Rate on 2-Year Loan...$435.6
Interest Rate on 5-Year Loan...$1,452
Explanation:
The formula for calculating simple interest is as follows.
I = P x R x T,
where I = interest
P= Principal
R= interest rate
T= time
For the loan at 4.5 percent for 2 years, the interest will be
= $4,840 x 4.5/100 x 2
= $4,840 x 0.045 x 2
= $435.6
Total cost of the loan will principal plus interest
=$435.6 + $4,840
=$5,275.6
Monthly loan cost
= $5,275.6/24
=$219.81
Total loan cost..$5,275.6
Monthly loan cost ...$219.81
For the Loan at 6 percent for 5 years, the interest will be
= $4,840 x 6/100 x 5
= $4,840 x 0.06 x 5
=$1,452
Total cost of the loan will be principal plus interest
=$ 4,840 + $1,452
=$6,292
Monthly costs will be
=$6,292/60
=$104.87
Total loan cost... $6,292
Monthly loan costs... $104.87
Chance company had two operating divisions, one manufacturing farm equipment and other office supplies. Both divisions are considered separate components as defined by generally accepted accounting principles. The farm equipment component had been unprofitable, and on Sept. 1, 2016, the company adopted a plan to sell the assets of the division.
The actual sale was completed on Dec. 15, 2016, at the price of $600,000. The book value of the division's assets was $1,000,000, resulting in a before-tax loss of $400,000 on the sale. The division incurred a before-tax operating loss from operations of $130,000 from the beginning of the year through Dec. 15. The income tax rate is 40%. Chances after-tax income from its continuing operations is $350,000.
Required:
Prepare an income statement for 2016 beginning with income from continuing operations. Include appropriate EPS disclosures assuming that 100,000 shares of common stock were outstanding throughout the year.
Answer:
-21,000
Explanation:
We can calculate the net income by Adding/deducting the gain/loss on the discontinued operations from the gain/loss of the continuing operations.
INCOME STATEMENT
Income from continuing Operations $350,000
Discontinued Operations
Loss from discontinued operations(w) -530,000
Income tax benefit $159,000
(400,000+130,000) x 30%
Net Income -21,000
Earning per share
Continuing Operations $3.5
(350,000/100,000)
Discontinued Operations -$5.3
(-530,000/100,000)
Net Income -$1.8
Working
Sale value of the segment $600,000
Book value of the segment ($1,000,000)
loss on sale of segment -$400,000
Loss from the Operations of the segment -$130,000
Loss on discontinued operation -$530,000
Broca Corporation has a current ratio of 2.5. Which of the following transactions will increase Broca's current ratio? Select one: a. the purchase of inventory for cash. b. the collection of an account receivable. c. the payment of an account payable. d. none of the above.
Answer:
b. the collection of an account receivable
Explanation:
The formula to compute the current ratio is shown below:
As we know that
Current ratio = Current assets ÷ Current liabilities
If the current ratio is 2.5 that means the current assets is higher than the current ratio
As per the given options, the option b is correct and hence the same is to be considered
The transaction that will increase Broca's current ratio is d. none of the above.
The current ratio is not increased by the purchase of inventory for cash because this transaction has no effect on the current assets. The collection of an account receivable is not going to increase the current ratio for the same reason above (no effect on the current assets).
The payment of an account payable reduces the current assets and current liabilities by the same amount and will not affect the current ratio.
Thus, the transaction that will increase the current ratio is d.
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Federated Fabrications leased a tooling machine on January 1, 2021, for a three-year period ending December 31, 2023. The lease agreement specified annual payments of $48,000 beginning with the first payment at the beginning of the lease, and each December 31 through 2022. The company had the option to purchase the machine on December 30, 2023, for $57,000 when its fair value was expected to be $72,000, a sufficient difference that exercise seems reasonably certain. The machine's estimated useful life was six years with no salvage value. Federated was aware that the lessor’s implicit rate of return was 10%.
Required:
a. Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance lease.
b. Prepare an amortization schedule that describes the pattern of interest expense for Federated over the lease term.
c. Prepare the appropriate entries for Federated from the beginning of the lease through the end of the lease term.
Answer:
All requirements solved
Explanation:
we can calculate the right of use asset and lease liability by determining the present value of all future cash flows and after calculating present values sum them up
Requirement 1: Right of use asset and lease liability
Present value (year 0) = 48,000 / (1+10%)^0 = 48,000
Present value (year 1) = 48,000 x 1/(1+10%)^1
Present value (year 1) = 48,000 x 0.909 = 43,636
Present value (year 2) = 48,000 x 1/(1+10%)^2
Present value (year 2) = 48,000 x 0.826 = 39,670
Present value (year 3) = 57,000 x 1/(1+10%)^3
Present value (year 3) = 57,000 x 0.751 = 42,825
Total present value = 48,000 + 43,636 + 39,670 + 42,825
Total present value = 174,131
Right of use asset and lease liability = 174,131
Requirement 2: Amortization schedule
Date payments effective interest Decrease Outstanding
10% in balance balance
1/1/21 174,131
1/1/21 48,000 48,000 126,131
12/31/21 48,000 12,613 35,387 90,744
12/31/22 48,000 9.074 38,926 51,818
12/31/23 48,000 5,182 51,818
Requirement 3: Journal entries
Amortization expense = 174,131/6
Amortization expense = 29,022
1/1/21
Dr Righ of use 74,131
Cr Lease payable 74,131
1/1/21
Dr lease payable 48,000
Cr cash 48,000
12/31/21
Dr Lease payable 35,387
Dr Interest expense 12,613
Cr Cash 48,000
12/31/21
Dr Amortization expense 29,022
Cr Right of use 29,022
12/31/22
Dr Lease payable 38,926
Dr Interest expense 9,074
Cr Cash 48,000
12/31/22
Dr Amortization expense 29,022
Cr Right of use 29,022
12/31/23
Dr Lease payable 51,818
Dr Interest expense 5,182
Cr Cash 57,000
12/31/23
Dr Amortization expense 29,022
Cr Right of use 29,022
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 8% of par, and a current market price of (a) $62, (b) $81, (c) $97, and (d) $136
Answer and Explanation:
The computation of the risk premium is shown below:-
Rate of return = Dividend ÷ Current market price of preferred stock
The dividend should be
= $100 × 8%
= $8
a Rate of return = $8 ÷ $62
= 12.90%
b. Rate of return = $8 ÷ $81
= 9.88%
c. Rate of return = $8 ÷ $97
= 8.25%
d. Rate of return = $8 ÷ $136
= 5.88%
Thirteen students entered the business program at Sante Fe College 2 years ago. The following table indicates what each student scored on the high school SAT math exam and their grade-point averages (GPAs) after students were in the Sante Fe program for 2 years.
Student A B C D E F G
SAT Score 421 375 585 693 608 392 418
GPA 2.93 2.87 3.03 3.42 3.66 2.91 2.12
Student H I J K L M
SAT Score 484 725 506 613 706 366
GPA 2.50 3.24 1.97 2.73 3.88 1.58
The least-squares regression equation that shows the best relationship between GPA and the SAT score is:________ (round your responses to four decimal places)
Answer:
ŷ = 0.0035X + 1.0030
Explanation:
Given the data :
Student A B C D E F G H I J K L M
SAT Score: 421 375 585 693 608 392 418 484 725 506 613 706 366
GPA: 2.93 2.87 3.03 3.42 3.66 2.91 2.12 2.50 3.24 1.97 2.73 3.88 1.58
We can obtain the Least square regression calculator, we can obtain the least square regression equation in the Format :
y = mx + c
Where ; m = gradient / slope
x = predictor variable ; c = intercept
y = Independent variable.
The model equation produced by the calculator is :
ŷ = 0.0035X + 1.0030
y predicted variable ; x = explanatory variable
0.0035 = slope or gradient ; 1.0030 = intercept
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The December 31, 2018, adjusted trial balance for Fightin' Blue Hens Corporation is presented below.
Accounts Debit Credit
Cash $12,000
Accounts Receivable 150,000
Prepaid Rent 6,000
Supplies 30,000
Equipment 400,000
Accumulated Depreciation $135,000
Accounts Payable 12,000
Salaries Payable 11,000
Interest Payable 5,000
Notes Payable (due in two years) 40,000
Common Stock 300,000
Retained Earnings 60,000
Service Revenue 500,000
Salaries Expense 400,000
Rent Expense 20,000
Depreciation Expense 40,000
Interest Expense 5,000
Totals $1,063,000 $1,063,000
Accounts Debit Credit
Service Revenue 500,000
Salaries Expense 400,000
Rent Expense 20,000
Depreciation Expense 40,000
Interest Expense 5,000
Total $1,063,000 $1,063,000
Required:
1. Prepare an income statement for the year ended December 31, 2021.
2. Prepare a statement of stockholders' equity for the year ended December 31, 2021, assuming no common stock was issued during 2021.
3. Prepare a classified balance sheet as of December 31, 2021.
Answer:
Please see answers below
Explanation:
1. Prepare an income statement for the year ended, December 31, 2021
Fightin' Blue Hems Corporation, Income statement for the year ended, December 31, 2021.
Details
$
Service revenue
500,000
Salaries expense
400,000)
Rent expense
20,000)
Depreciation expense
40,000)
Interest expense
5,000)
Earnings for the year
35,000
2. Prepare a statement of stockholder's equity for the year ended, 31, December, 2021
Fightin' Blue Hens Corporation statement of stockholder equity for the year ended , December 31, 2021.
Details
$
Common stock
300,000
Retained earnings
60,000
Earnings for the year
35,000
Stockholder equity
395,000
3. Prepare a classified balance sheet as at 31, December
Fightin' Blue Hens Corporation, classified balance sheet for the hear ends, December 31, 2021.
Details
$
Fixed assets
Equipment
400,000
Accumulated depreciation
135,000
Net fixed assets
265,000
Current assets
Cash
12,000
Accounts receivables
150,000
Prepaid rent
6,000
Supplies
30,000
Total current assets
198,000
Current liabilities
Accounts payable
($12,000)
Salaries payable
(11,000)
Interest payable
(5,000)
Working capital
170,000
Long term liabilities
Notes payable (due in two years)
(40,000)
Net total assets
395,000
Financed by;
Common stock
300,000
Retained earnings
60,000
Earnings for the year
35,000
Stockholder equity
395,000
Crow earned $585.15 during the week ended March 1, 20--. Prior to payday, Crow had cumulative gross earnings of $4,733.20. Round your answers to the nearest cent. a. The amount of OASDI taxes to withhold from Crow's pay is $ . b. The amount of HI taxes to withhold from Crow's pay is
Answer:
A. $36.28
B. $8.48
Explanation:
a. Calculation for the amount of OASDI taxes to withhold from Crow's pay
OASDI taxes is 6.2%
Hence,
OASDI taxes to withhold = 585.15*0.62
OASDI taxes to withhold = $36.28
Therefore the OASDI taxes to withhold from Crow's pay is $36.28
b. Calculation for the amount of HI taxes to withhold from Crow's pay
HI taxes is 1.45%
Hence,
HI taxes to withhold =585.15*0.0145
HI taxes to withhold=$8.48
Therefore HI taxes to withhold from Crow's pay is $8.48
Constructing and Assessing Income Statements Using Cost-to-Cost Method On March 15, 2014, Frankel Construction contracted to build a shopping center at a contract price of $125 million. The schedule of expected (which equals actual) cash collections and contract costs follow ($ millions):
Year Cash Collections Cost Incurred
2014 $30 $20
2015 50 45
2016 45 35
Total $125 $100
Required:
a. Calculate the amount of revenue, expense, and net income for each of the three years 2014 through 2016 using the cost-to-cost method.
b. What best summarizes our conclusion about the usefulness of the cost-to-cost method for this company?
Answer:
a. Net income in 2014 is $5.00 million; Net income in 2015 is $11.25 million; and Net income in 2016 is $8.75million.
b. The best summary is that under generally accepted accounting principles (GAAP), the cost-to-cost method is a method that is acceptable to be applied to contracts that span more than one accounting period.
Therefore, the cost-to-cost method is employed in calculating the revenue and net income for Frankel Construction for each of the years 2014, 2015 and 2016.
Explanation:
a. Calculate the amount of revenue, expense, and net income for each of the three years 2014 through 2016 using the cost-to-cost method.
Note: See the attached excel file for the calculations.
Cost-to-cost method can be described as a cost and revenue recognition approach in which all costs recorded to date on a project are divided by the total expected costs to be incurred on the project in order to obtain the overall percentage of completion of the project which is employed in estimating revenue and net income.
b. What best summarizes our conclusion about the usefulness of the cost-to-cost method for this company?
The best summary is that under generally accepted accounting principles (GAAP), the cost-to-cost method is a method that is acceptable to be applied to contracts that span more than one accounting period.
In this question, the cost-to-cost method is employed in calculating the revenue and net income for this company for each of the year 2014, 2015 and 2016.
Potential Market – the set of consumers who profess some level of interest in a defined market offer Mass Market – the set of consumers who profess some level of interest in and have the requisite income to a defined market offer Available Market – the set of consumers with the interest, requisite income and access to a defined marketQualified Available Market – the set of consumers with the interest, requisite income, access and qualifications for a defined market offer offerHonda Ltd. of Japan is reviewing the motorcycle market of a Mid-Pacific island. A recent study revealed twenty percent (20%) of the island's 1,000,000 population exhibited an interest in owning a motorcycle. Of those interested, only fifty percent (50%) have the requisite income to purchase a Honda motorcycle. Three (3) Honda dealerships provide the island’s entire population with access to the defined market offer. However, twenty-five percent (25%) of the interested individuals with the requisite income and access to the defined market offer do not meet the island's minimum license age requirement of eighteen (18) years of age.Calculate the number, not percentage, of the people in each of the following levels of market definition. (Show calculations)a. Potential Marketb. Mass Marketc. Available Marketd. Qualified Available Market
Answer:
A
Potential market
Interested percentage of people x total population
1000000x20%
= 200000
B.
Mass market is potential market x those with requisite income in percentage
= 200000x50%
= 200000x0.5
= 100000
C
Available market is also mass market
= 100000
D.
Qualified market
Available market x minimum qualification in percentage
Percentage of Minimum qualification = 100 - 25%
= 75%
Qualified market = 100000x0.75
= 75000
definition of observant in entrepreneur characteristics
Answer:
In Entrepreneur characteristics, observant refers to the ability to quickly notice a certain pattern or unusual situation.
This skill is important because of these two following reasons:
- It helped the entrepreneur notice an existing trend. This trend could represent the things that are currently favored by the consumers in a certain market. Understanding trend will help you creating a product that can fit into that trend.
- It also help the entrepreneur notice the problems that occur internally. For example, being observant will help the entrepreneur notice the negative emotion that the employees experience when facing a certain problem. After noticing this, the entrepreneur could develop some sort of strategy to lift their spirit.
The following inventory valuation errors have been discovered for Knox Corporation:
The 2015 year-end inventory was overstated by $23,000
The 2016 year-end inventory was understated by $61,000
The 2017 year-end inventory was understated by $17,000
The reported income before taxes for Knox was:
Year: Income before Taxes:
2015 $138,000
2016 $254,000
2017 $168,000
Required:
Compute what income before taxes for 2015, 2016, and 2017 should have been after correcting for the errors.
Answer:
Income +/- inventory adjustment
2015: 138,000 - 23,000 = 115,000
2016: 254,000 + 61,000 = 315,000
2017: 168,000 + 17,000 = 185,000
Explanation:
Inventory Identity:
Beginning + Purchases = Ending + COGS
As the mistake is on the right side it compensates by the other component which is COGS
When the inventory is overstated this means COGS is understated.
We didn't record the cost of good sold thefore our gross profit is higher making the net income higher.
When the inventory is understated this means COGS is overstated.
We record more cost of goods sold thefore our gross profit is lower making the net income fewer as well.
a. On December 31, Gina receives a distribution of $140,000 cash in liquidation of her partnership interest. Nothing is stated in the partnership agreement about goodwill. Gina's outside basis for the partnership interest immediately before the distribution is $90,000. (1) How much is Gina's recognized gain from the distribution
Answer:
some information is missing in this question:
the fair market value of Gina's interest int he partnership = $480,000 x 25% = $120,000
Gina is receiving $140,000 in cash, therefore, $20,000 can be considered goodwill.
Since Gina's outside basis is $90,000 (= $75,000 of cash + $15,000 of capital assets), she cannot claim any capital gain, instead she must declare an ordinary gain from the distribution (ordinary income) = $140,000 - $90,000 = $50,000.
The partnership can deduct Gina's gain ($50,000) since no part of it included property payment.
Presented below are condensed financial statements adapted from those of two actual companies competing as the primary players in a specialty area of the food manufacturing and distribution industry. ($ in millions, except per share amounts.)
Balance Sheets
Metropolitan Republic
Assets $ 179.3 $ 37.1
Cash
Accounts receivable (net) 422.7 325.0
Short-term investments — 4.7
Inventories 466.4 635.2
Prepaid expenses and other current assets134.6 476.7
Current assets $ 1,203.0 1,478.7
Property, plant, and equipment (net) 2,608.2 2,064.6
Intangibles and other assets 210.3 464.7
Total assets $ 4,021.5 $4,008.0
Liabilities and Shareholders’ Equity
Accounts payable $ 467.9 691.2
Short-term notes 227.1 557.4
Accruals and other current liabilities 585.2 538.5
Current liabilities $ 1,280.2 1,787.1
Long-term debt 535.6 542.3
Deferred tax liability 384.6 610.7
Other long-term liabilities 104.0 95.1
Total liabilities $ 2,304.4 3,035.2
Common stock (par and additional paid-in capital)
144.9 335.0
Retained earnings 2,476.9 1,601.9
Less: treasury stock (904.7) (964.1)
Total liabilities and shareholders’ equity $
4,021.5 4,008.0
Income Statements
Net sales 5,698.0 7,768.2
Cost of goods sold (2,909.0) (4,481.7)
Gross profit $ 2,789.0 3,286.5
Operating expenses (1,743.7 ) (2,539.2)
Interest expense (56.8) (46.6)
Income before taxes $ 988.5 700.7
Tax expense (394.7) (276.1)
Net income 593.8 424.6
Net income per share $ 2.40 6.50
Note: Because comparative statements are not provided you should use year-end balances in place of average balances as appropriate.
Required:
Calculate the rate of return on assets for the following companies
Calculate the return on assets for both companies.
Calculate the Rate of return on shareholders’ equity for the following companies
Calculate the equity multiplier for the following companies.
Calculate the acid-test ratio and current ratio for the following companies.
Calculate the receivables and inventory turnover ratios the following companies.
Calculate the times interest earned ratio for the following companies.
Answer and Explanation:
We refer to balance sheet figures for each company stated above to retrieve figures for our calculations and use the following formulas for calculations:
For return on assets= net imcome/total assets
For rate of return on shareholders equity =net income/equity
For equity multiplier= total assets/ total equity
For acid-test ratio=liquid assets/current liabilities
For current ratio =current assets/current liabilities
For receivables = credit sales /acct receivables and inventory turnover ratios=cost of goods/inventory
For times interest earned ratio=ebit/interest expenses
A Corporation has two divisions: the South Division and the West Division. The corporation's net operating income is $26,900. The South Division's divisional segment margin is $42,800 and the West Division's divisional segment margin is $29,900. What is the amount of the common fixed expense not traceable to the individual divisions
Answer:
$45,800
Explanation:
Common fixed expense not traceable to the individual divisions = South division's divisional segment margin + west division's divisional segment - corporation's net operating income
Common fixed expense not traceable to the individual divisions = $42,800 + $29,900 - $26,900
Common fixed expense not traceable to the individual divisions = $45,800
QUESTION 2 / 10
Which of the following is the BEST reason to use cash for making purchases?
A. Keeping track of how much you have spent is simple.
B. Splitting bills with friends is easier.
C. Getting more cash from an ATM machine is easy to do.
D. Knowing what you have spent your money on is
simple.
The best reason to use cash for making purchases is keeping track of how much you have spent is simple. Thus, option A is correct.
What is purchases?Purchasing is the process through which a company or organization acquires products or services in order to achieve its objectives. Although numerous organizations seek to establish standards in the purchasing process, practices can vary widely amongst firms.
Cash makes budgeting and sticking to it simpler. When you pay with cash that you've planned for purchases, it's easy to keep track of where your money is going. It's also eye-opening and keeps you grounded in terms of how much money is going out vs coming in from week to week or month to month.
The main incentive to utilize cash for purchases is that it is simple to keep account of the amount you have spent. As a result, option A is correct.
Learn more about purchases here:
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The revenues budget identifies: a. expected cash flows for each product b. actual sales from last year for each product c. the expected level of sales for the company d. the variance of sales from actual for each product
Answer:
c. the expected level of sales for the company
Explanation:
Revenue/Sales Budget is the first budget to be prepared by most companies because most businesses are sales led.
This Budget shows, the expected level of sales for the company.
During 2020, PC Software Inc. developed a new personal computer database management software package. Total expenditures on the project were $3,000,000, of which 40% occurred after the technological feasibility of the product had been established. The product was completed and offered for sale on January 1, 2021. During 2021, revenues from sales of the product totaled $4,800,000. The package is expected to be successfully marketable for five years, and the total revenues over the life of the product are estimated to be $20,000,000.
Required
A. Prepare the journal entry to account for the development of this product in 2020.
B. Prepare the journal entry to record the amortization of capitalized computer software development costs in 2021.
C. What disclosures are required in the December 31, 2021, financial statements regarding computer software costs?
At December 31, 2021, the unamortized software intangible asset totals ______. This is equal to _____ originally capitalized less amortization in 2021 of _______. The amount charged to expense as amortization of software intangible asset in 2021 was ______. The estimated net realizable value of computer software is greater than the remaining unamortized software intangible asset.
Answer:
PC Software Inc.
A. Journal Entry to account for the development of software in 2020:
Debit Software $1,200,000
Debit Development Expenses $1,800,000
Credit Cash Account $3,000
To capitalize 40% software development costs.
B. Journal Entry to amortize Capitalize Computer Software Development in 2021:
Debit Amortization Expense $240,000
Credit Accumulated Amortization - Software $240,000
To record the amortization of the capitalized software.
C. At December 31, 2021, the unamortized software intangible asset totals _$960,000_____. This is equal to _$1,200,000____ originally capitalized less amortization in 2021 of _ $240,000______. The amount charged to expense as amortization of software intangible asset in 2021 was _$240,000_____. The estimated net realizable value of computer software is greater than the remaining unamortized software intangible asset.
Explanation:
PC Software Inc. must follow the US GAAP rule, which states that the development costs incurred for an internally-generated software development are capitalized only when it is probable that the development is commercially feasible. Based on this, only 40% of the software expenditures are capitalized.
In 1998, the Russian government defaulted on its bonds. According to the open-economy macroeconomic model, this should have
Answer:
An increase in the net export and Russian interest rate.
Explanation: An open economy is an economy where all players which includes traders, investors and other stakeholders in the economy both within and outside the economy freely conduct their businesses and are controlled by market forces with minimal interference by Government agencies.
According to the open-economy macroeconomic model with the defaulting by the Russian government in 1998 will definitely lead to an increase in net export and an increase in Russian Interest rate.
During November, the production department of a process operations system completed and transferred to finished goods 26,000 units that were in process at the beginning of November and 120,000 units that were started and completed in November. November's beginning inventory units were 100% complete with respect to materials and 45% complete with respect to conversion. At the end of November, 33,000 additional units were in process in the production department and were 100% complete with respect to materials and 65% complete with respect to conversion.
Required:
Compute the number of equivalent units with respect to materials for November using the weighted-average method.
Answer:
Equivalent Units = 179,000
Explanation:
Number of units completed and transferred out = Units in beginning + Units started and completed during the month
= 26,000 + 120,000
= 146,000 units
Equivalent Units = Number of units completed and transferred out + (Additional units in process *Percentage completed)
= 146,000 + 33,000*100%
= 146,000 + 33,000
= 179,000
Therefore, the number of equivalent units using the weighted-average method is 179,000
The given statements pertain to aggregate supply and aggregate demand. Label each statement as being either true or false.
Statement 1: An increase in the cost of energy affects both aggregate supply and aggregate demand.
A. True
B. False
Statement 2: One of the factors that increase aggregate demand is the consumption of more imports.
A. True
B. False
Statement 3: If the value of people's stock portfolios increases or if peoples houses appreciate in value, then this very easily could lead to an increase in aggregated demand.
A. True
B. False
Answer:
Statement 1: An increase in the cost of energy affects both aggregate supply and aggregate demand.
A. TrueAn increase in energy costs reduces both aggregate supply and demand.
Statement 2: One of the factors that increase aggregate demand is the consumption of more imports.
B. FalseIf net exports decrease (exports - imports), then the aggregate demand curve will shift to the left, which means it will decrease.
Statement 3: If the value of people's stock portfolios increases or if peoples houses appreciate in value, then this very easily could lead to an increase in aggregated demand.
A. TrueThis would lead to an increase in the net worth of households, which generally leads to higher spending.
Store A charges $20 per t-shirt. They're having a limited "buy 2, get one free"
promotion. You could buy similar t-shirts at Store B, where each shirt is $20 but you have
a coupon for $5 off every shirt. Give one good reason to buy from Store A and one
good reason to buy from Store B.
Answer:
Both Stores give a discount for buying their shirts
Alice and Bob entered into a forward contract some time ago. Alice has the long position, while Bob has the short position. The forward contract will mature in three months and has a delivery price of $40. The current forward price for the contract is $42. The three-month risk-free interest rate (with continuous compounding) is 8%. What is the value Bob's position?
Answer:
$ - 1.96
Explanation:
After three months, Alice (long the contract) can buy the underlying by paying the delivery price of $40 which is $2 less than $42 the long position would have to pay if the contract was entered today.
DATA
Delivery price = $40
The three-month risk-free interest rate (with continuous compounding) =8%.
The current forward price = $42
Solution
So based on the present situation, Alice would be in $2 profit at the end of 3 months and Bob would be in $2 loss
Present value of Bob's loss (with continuous compounding) = 2\times e^{-0.08\times 0.25}
Present value of Bob's loss (with continuous compounding) = $1.96
The value of Bob's position is $ - 1.96
Farr Corp. purchased a new delivery van on January 1, 2020 and chose to use the double declining balance depreciation method. The van cost $48,000 with an estimated life of five years and a $12,000 salvage value. After the year end adjustment, how much accumulated depreciation would be recorded on the van at December 31, 2021
Answer:
$30,720
Explanation:
First, we will calculate the depreciation for 2020.
Depreciation for 2020 = ($48,000 cost - 0) × 40%
= $19,200
Depreciation for 2021 = ($48,000 cost - $19,200 depreciation 2020) × 40%
= $11,520
Accumulated depreciation at the end of 2021
= $11,520 + $19,200
= $30,720
The value of $30,720 will be recorded as accumulated depreciation on the value of the van at December 31, 2021.
• Note, the asset's annual depreciation will be 20% of the depreciation cost since its useful life is 5. It will however be 40% since we are using the double declining balance method.
Dom has $90,000 that he wishes to invest now in order to use the accumulation for purchasing a retirement annuity in five years. After consulting with his financial advisor, he has been offered four types of fixed-income investments, labeled as investments A, B, C, and D.
Investments A and B are available at the beginning of each of the next five years (call them years 1–5). Each dollar invested in A at the beginning of a year returns $1.20 (a profit of $0.20) two years later, in time for immediate reinvestment. Each dollar invested in B at the beginning of a year returns $1.36 three years later.
Investments C and D will each be available just once in the future. Each dollar invested in C at the beginning of year 2 returns $1.66 at the end of year 5. Each dollar invested in D at the beginning of year 5 returns $1.12 at the end of year 5.
Your uncle is obligated to make a balloon payment on an existing loan in the amount of $24,000 at the end of year 3. He wants to make that payment out of the investment account.
1) Devise an investment plan for your uncle that maximizes the value of the investment account at the end of five years. How much money will be available for the annuity in five years?
2) Show the network diagram corresponding to the solution in (1). That is, label each of the arcs in the solution and verify that the flows are consistent with the given information.
Answer:
First of all, you must invest enough money in B in order to pay your debt.
present value = future value / expected return
present value = $24,000 / $1.36 = $17,647.06
you have $90,000 - $17,647.06 = $72,352.94 to invest in A.
at the end of year 2, you will have:
future value = present value x expected return = $72,352.94 x $1.20 = $86,823.53
then you should invest that money ($86,823.53) in invested D and at the end of year 4 you will have:
future value = $86,823.53 x $1.66 = $144,127.06
finally, you should invest $144,127.06 in investment E and at the end of ear 5 you will have:
future value = $144,127.06 x $1.12 = $161,422.31
2) it is really hard to draw a diagram without drawing tools, but i will try
⇒ invest $17,647.06 in B ⇒ year 3, collect $24,000
from B and pay off debt
today
$90,000
⇒ invest $72,352.94 ⇒ year 2, invest ⇒ year 4, invest
in A $86,823.53 in D $144,127.06 in E
continues ... ⇒ year 5, collect $161,422.31 from E