Selected comparative financial statements of Korbin Company follow.
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31, 2017, 2016, and 2015
2017 2016 2015
Sales $ 555,000 $ 340,000 $ 278,000
Cost of goods sold 283,500 212,500 153,900
Gross profit 271,500 127,500 124,100
Selling expenses 102,900 46,920 50,800
Administrative expenses 50,668 29,920 22,800
Total expenses 153,568 76,840 73,600
Income before taxes 117,932 50,660 50,500
Income taxes 40,800 10,370 15,670
Net income $ 77,132 $ 40,290 $ 34,830
Required:
a. Calculate the income statement data in common-size percents.
Answer and Explanation:
The computation is shown below:
Particulars 2015 % 2014 % 2013 %
Sales $555,000 100 $340,000 100 $278,000 100 Less
COGS $283,500 51.08 $212,500 62.5 $153,900 55.36 Gross profit $271,500 $48.92 $127,500 37.5 $124,100 44.64 Less:
Selling expenses $102,900 18.54 $46,920 13.8 $50,800 18.27 Administrative expenses $50,668 9.13 $29,920 8.8 $228,00 8.20
total expenses $153,568 27.67 $76,480 22.49 $736,00 26.47 Income before tax $117,932 21.25 $50,660 14.9 $50,500 18.16 Income taxes $40,800 7.35 $10,370 3.05 $15,670 5.64
Net income $77,132 13.90 $40,290 11.85 $34,830 12.53
For cost of goods sold percentage we simply divide the cost of goods sold by the sales and the same is applied for other items
What is macroeconomics?
Answer:
Macroeconomics is the study of large scale economic issues such as those which affect the entire economy. This is in contrast to Microeconomics which looks at smaller scale economic principles. Macroeconomics is a highly practical discipline as it deals with principles that directly impact every part of life.
Bentley Enterprises uses process costing to control costs in the manufacture of Dust Sensors for the mining industry. The following information pertains to operations for November. (CMA Exam adapted) Units Work in process, November 1st 16,000 Started in production during November 100,000 Work in process, November 30th 24,000 The beginning inventory was 60% complete as to materials and 20% complete as to conversion costs. The ending inventory was 90% complete as to materials and 40% complete as to conversion costs. Costs pertaining to November are as follows: Beginning inventory: direct materials, $54,560; direct labor, $20,320; manufacturing overhead, $15,240. Costs incurred during the month: direct materials, $468,000; direct labor, $182,880; manufacturing overhead, $391,160. What is the equivalent unit cost for materials assuming Bentley uses first-in, first-out (FIFO) process costing?
Answer:
Material Cost per equivalent unit =$4.87
Explanation:
First in First out (FIFO)methods separates completed units into fully worked and opening inventory
Fully worked units: These represent units of inventory that were started in a current period and completed that same period. The fully worked units are calculated in order to separate the opening inventory from the the newly introduced when accounting for completed units under the FIFO.
For Bentley , fully worked units is
Fully worked = Newly introduced - closing work in progress
= 100,000- 24,000 = 76,000 .
Opening inventory = 16,000
Item Units Equivalent Units
Opening inventory 16,000 × 40%= 9,600
Completed unit 76,000 × 100% = 480,000
Closing inventory 24,000 × 90% = 21,600
Total equivalent units 107,200
Cost per equivalent unit = Total cost/ equivalent inits
= 54560 +468,000/ 107,200 = $4.87
Material Cost per equivalent unit =$4.87
The equivalent unit cost for materials assuming Bentley uses first-in and first-out (FIFO) process costing:
For Bentley , fully worked units is
Fully worked = Newly introduced - closing work in progressFully worked= 100,000- 24,000 = 76,000 .Opening inventory = 16,000
Item Units Equivalent Units
Opening inventory 16,000 × 40%= 9,600
Completed unit 76,000 × 100% = 480,000
Closing inventory 24,000 × 90% = 21,600
Total equivalent units 107,200
Cost per equivalent unit = Total cost/ equivalent inits
Cost per equivalent unit= 54560 +468,000/ 107,200 = $4.87
The Material Cost per equivalent unit =$4.87.
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Axsom Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 1,300 direct labor-hours will be required in March. The variable overhead rate is $8.90 per direct laborhour. The company's budgeted fixed manufacturing overhead is $20,020 per month, which includes depreciation of $2,600. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. What should be the predetermined overhead rate for March
Answer:
Estimated manufacturing overhead rate= $24.3 per direct labor hour
Explanation:
Giving the following information:
The direct labor budget indicates that 1,300 direct labor-hours will be required in March.
The variable overhead rate is $8.90 per direct labor hour.
The company's budgeted fixed manufacturing overhead is $20,020 per month.
To calculate the estimated manufacturing overhead rate we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Estimated manufacturing overhead rate= (20,020/1,300) + 8.9
Estimated manufacturing overhead rate= $24.3 per direct labor hour
Answer:
Overhead rate = $15.4 per direct labour hour
Explanation:
The predetermined overhead absorption rate = Estimated overhead for march/ Estimated direct labour hours
= $20,020/ 1,300 hours
= $15.4 per hour
Overhead rate = $15.4 per direct labour hour
Note that deprecation is part of the fixed cost and that the examiner included the additional information about it just to distract the student
. Spot rates and forward rates:Assume that the current yield curve for zero-coupon bonds (spot rates) is as follows:y1 = 0.5%, y2 = 0.75%, y3 = 1.0%, y4 = 1.25%, y5 = 1.5%a. Plot the spot rates against maturity (yield curve). Is the yield curve upward or downward sloping? Do market participants expect interest rates to increase or decrease in the future? b. What are the implied 1-year forward rates f2, f3, f4, and f5? Are interest rates expected to increase or decrease?Assume that there is no uncertainty about future short rates. This means that future 1 year interest rates will be equal to current forward rates (which you calculated in b.).c. In that situation what will be the spot curve (that is, the yields to maturity on 1, 2, 3, and 4-year zero coupon bonds) in 1 year? d. What is the price of a 5-year coupon bond making annual coupon payments of 2% and a par value of 1000 today? Is the bond trading above or below par? Why?e. What is the price of this bond next year (remember, it is then a 4-year coupon bond)? What is the rate of return on this bond over the next year?
Answer:
Check the explanation
Explanation:
As is observable in the first attached image below, the yield curve is upward sloping. According to the pure expectations hypothesis which states that current short-term interest rates are a reflection of long-term term interest rates, market participants should expect long-term interest rates to rise going forward.
(b) Implied one-year forward rate calculation:
[tex]1+f2 = [(1+y2)^(2)] / (1+y1)[/tex]
f2 = 1.0006%
[tex]f3 = [{(1+y3)^(3)} / {(1+y2)^(2)}] - 1[/tex]
f3 = 1.502% approximately
[tex]f4 = [{(1+y4)^(4)} / {(1+y3)^(3)}] - 1[/tex]
f4 = 2.004% approximately
[tex]f5 =[{(1+y5)^(5)} / {(1+y4)^(4)}] - 1[/tex]
f5 = 2.506% approximately.
As implied one-year forward rates are observed to be rising and there is no uncertainty about future spot rates, future interest rates are expected to rise.
(C) Kindly check the second attached image below for the solution to question c
(d) The bond's price would be calculated by summing the Present Values(PVs) of the bond's future cash flows (in the form of annual coupon payments and face value redemption). The discount rate, however, should be the spot rates from the yield curve instead of a single promised yield to maturity.
Let bond price be Pm
Therefore, Pm = 20 / 1.005 + 20 / (1.0075)^(2) + 20 / (1.01)^(3) + 20 / (1.0125)^(4) + 1020 / (1.015)^(5) = $ 1024.872 approximately.
The bond's market value is above its par value, thereby implying that the bond is selling at a premium. This happens whenever the bond's discount rate (or spot interest rates in this case) is below the bond's annual coupon rate.
Prior to May 1, Fortune Company has never had any treasury stock transactions. A company repurchased 100 shares of its common stock on May 1 for $5,000. On July 1, it reissued 50 of these shares at $52 per share. On August 1, it reissued the remaining treasury shares at $49 per share. What is the balance in the Paid-in Capital, Treasury Stock account on August 2?
Answer:
$50
Explanation:
Fortune Company
Paid-in capital,Treasury stock:
May1 $ 0
July 1: $2/share *50 shares 100
August 1:$1/share*50 shares (50)
Balance August 2 $ 50
Therefore the balance in the Paid-in Capital, Treasury Stock account on August 2 will be $50
Pricing Strategy, Sales Variances Eastman, Inc., manufactures and sells three products: R, S, and T. In January, Eastman, Inc., budgeted sales of the following. Budgeted Volume Budgeted Price Product R 125,900 $26 Product S 156,500 22 Product T 22,500 21 At the end of the year, actual sales revenue for Product R and Product S was $3,220,000 and $3,358,000, respectively. The actual price charged for Product R was $25 and for Product S was $20. Only $11 was charged for Product T to encourage more consumers to buy it, and actual sales revenue equaled $645,150 for this product. Required: 1. Calculate the sales price and sales volume variances for each of the three products based on the original budget. Sales price variance Sales volume variance Product R $ $ Product S $ $ Product T $ $ 2. Suppose that Product T is a new product just introduced during the year. What pricing strategy is Eastman, Inc., following for this product? Check My Work
Answer:
Check the explanation
Explanation:
Sales price variance = (Actual price - Budgeted price) * Actual units sold
Product R : ($25 - $26) * 123000 = $123000 unfavorable
Product S:($20 - $22) * 162700 = $325400 unfavorable
Product T: ($10 - $20) * 54000 = $540000 unfavorable
Sales volume variance = (Actual units - Budgeted units) * Standard price
Product R : (120000 - 123000) * 26 = $78000 favorable
Product S:(150000 - 162700) * 22 = $279400 favorable
Product T: (20000 - 54000) * 20 = $680000 favorable
Notes:
Actual units:
Product R = $3075000/ $25 = 123000
Product S = $3254000/$20 = 162700
Product T = $540000/$10 = 54000 units
Data from Dunshee Corporation's most recent balance sheet appear below: Year 2 Year 1 Current assets: Cash $ 130 $ 100 Accounts receivable, net 270 290 Inventory 90 110 Prepaid expenses 10 10 Total current assets $ 500 $ 510 Total current liabilities $ 230 $ 220 Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730. The average collection period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
Answer:
50 days
Explanation:
THE average collection period for Year 2 is closest to 50 days
Year 2:
cost of goods sold = $730
opening inventory = $110
closing inventory = $90 therefore total inventory = 110 + 90 = $200
Average inventory = $100
to calculate inventory turnover ratio = cost of goods sold / average inventory
= 730 / 100 = 7.30
The average collection period = 365 days / inventory turnover ratio
= 365/7.30 = 50 days
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $74,000. The machine would replace an old piece of equipment that costs $19,000 per year to operate. The new machine would cost $9,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $31,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine
Answer:
$7,400 per year
Explanation:
Data provided for computing the annual depreciation expense is here below:-
Automated bottling machine = $74,000
Useful life = 10 years
The calculation of annual depreciation expense is given below:-
Annual depreciation expense = Automated bottling machine ÷ Useful life
= $74,000 ÷ 10
= $7,400 per year
Therefore for computing the annual depreciation expense we simply divide the automated bottling machine by useful life.
On January 1, 2019, a company issued $401,600 of 10-year, 12% bonds. The interest is payable semi-annually on June 30 and December 31. The issue price was $417,153 based on a 10% market interest rate. The effective-interest method of amortization is used. Rounding all calculations to the nearest whole dollar, what is the interest expense for the six-month period ending June 30, 2019?
Answer:
$ 20,857.65
Explanation:
The interest expense for the first interest expense is cash proceeds from the bond issuance multiplied by the 10% market interest rate adjusted for semiannual amount by multiplying by 6 months and dividing by 12 months.
Interest expense=cash proceeds*market interest rate*6/12
cash proceeds is $417,153
market interest rate is 10%
interest expense for the six-month period ending June 30 2019=$417,153*10%*6/12=$ 20,857.65
The first interest expense is closest to $ 20,857.65
The following data from the just completed year are taken from the accounting records of Mason Company: Sales $ 656,000 Direct labor cost $ 89,000 Raw material purchases $ 137,000 Selling expenses $ 106,000 Administrative expenses $ 48,000 Manufacturing overhead applied to work in process $ 206,000 Actual manufacturing overhead costs $ 226,000 Inventories Beginning Ending Raw materials $ 8,200 $ 11,000 Work in process $ 5,600 $ 20,500 Finished goods $ 80,000 $ 25,800 Required: 1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials. 2. Prepare a schedule of cost of goods sold. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. 3. Prepare an income statement.
Answer:
Cost of Goods Manufactured $ 434,300
Adjusted Cost of Goods Sold $ 488,500
Operating Income $ 13,500
Explanation:
We do the following additions and subtractions to find the cost of goods manufactured.
Mason Company:
Schedule of Cost of Goods Manufactured
Inventories Beginning Raw materials $ 8,200
Add Raw material purchases $ 137,000
Less Inventories Ending Raw materials $ 11,000
Direct Materials Used $134,200
Add Direct labor cost $ 89,000
Add Actual manufacturing overhead costs $ 226,000
Total Manufacturing Costs $449,200
Add Inventories Beginning Work in process $ 5,600
Cost of Goods Available for Manufacture 454,800
Inventories Ending Work in process $ 20,500
Cost of Goods Manufactured $ 434,300
The cost of goods manufactured is again added and subtracted with finished goods inventories to prepare the schedule of cost of goods sold.
Mason Company:
Schedule of Cost of Goods Sold
Inventories Beginning Raw materials $ 8,200
Add Raw material purchases $ 137,000
Less Inventories Ending Raw materials $ 11,000
Direct Materials Used $134,200
Add Direct labor cost $ 89,000
Add Applied manufacturing overhead costs $ 206,000
Total Manufacturing Costs $429,200
Add Inventories Beginning Work in process $ 5,600
Cost of Goods Available for Manufacture 434,800
Inventories Ending Work in process $ 20,500
Cost of Goods Manufactured $ 414,300
Add Inventories Beginning Finished goods $ 80,000
Cost of Goods Available for Sale $ 494,300
Less Inventories Ending Finished goods $ 25,800
Un adjusted Cost of Good Sold $ 468,500
Add Under-applied Manufacturing Overhead 20,000
Adjusted Cost of Goods Sold $ 488,500
If we add the applied manufacturing overhead then the cost of goods sold is adjusted by adding the amount underapplied.
Mason Company:
Income Statement
Sales $ 656,000
Less Cost of Goods Sold $ 488,500 (as calculated above)
Gross Profit $ 167,500
Less Selling expenses $ 106,000
Less Administrative expenses $ 48,000
Operating Income $ 13,500
Phil Graves Cemetery had 63,000 shares of common stock issued and outstanding at January 1, 2021. During 2021, Graves took the following actions: June 1 Declared a 2-for-1 stock split, when the fair value of the stock was $38 per share. October 15 Declared a $0.50 per share cash dividend. In Graves's statement of shareholders' equity for 2021, what amount should Graves report as dividends
Answer:
Dividends for the year $63,000
Explanation:
Phil Graves Cemetery
Jan. 1 Shares issued and outstanding 63,000
June 1 2-for-1 stock split x 2
June 1 Shares issued and outstanding 126,000
Oct. 15 Cash dividend declared (per share)x $ .50
Dividends for the year $63,000
Therefore the amount that Graves should report as dividends is $63,000
Assume that, on January 1, 2021, Sosa Enterprises paid $2,240,000 for its investment in 30,000 shares of Orioles Co. Further, assume that Orioles has 100,000 total shares of stock issued and estimates an eight-year remaining useful life and straight-line depreciation with no residual value for its depreciable assets.
At January 1, 2021, the book value of Orioles' identifiable net assets was $7,260,000, and the fair value of Orioles was $10,000,000. The difference between Orioles' fair value and the book value of its identifiable net assets is attributable to $1,950,000 of land and the remainder to depreciable assets. Goodwill was not part of this transaction. The following information pertains to Orioles during 2021:
Net Income $ 500,000 Dividends declared and paid $ 300,000 Market price of common stock on 12/31/2021 $ 80 /shareWhat amount would Sosa Enterprises report in its year-end 2021 balance sheet for its investment in Orioles Co.?
Answer:
Amount reported in the year-end 2021 is $2,270,375
Explanation:
[tex]\text{The percentage of investment in Orioles} = \frac{30000 \ shares }{100000 \ shares} = 30 \ percent.[/tex]
The difference between fair value and the book value attributable to depreciable assets = $10,000,000 -$7,260,000 -$1,950,000
=$790,000
Attributable to depreciation assets:
[tex]= \frac{790000}{8 \ years} \times 30 percent \\[/tex]
[tex]= 29625 dollars.[/tex]
Balance sheet for its investment in Orioles:
Particulars Amount
Cash paid to Orioles = $2,240,000
Add: net income (500,000 *30%) = $150,000
Less: Dividends(300,000 *30%) = ($90,000)
Less: Attributable to depreciation. = ($29,625)
Amount reported in the year-end 2021. = $2,270,375
In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: Net income for the year was $ 57,000 Accounts payable increased by 23,000 Accounts receivable decreased by 35,000 Inventories decreased by 10,000 Cash dividends paid were 19,000 Depreciation expense was 30,000 Net cash provided by operating activities was:
Answer:
Net Cash Flow from Operating Activities = $155,000
Explanation:
Cash flow from Operating activities:
Particular Amount
Income During the year $57,000
Adjustments :
Depreciation $30,000
Changes in Current assets and liabilities:
decreased in Accounts receivable $35,000
decreased in Inventory $10,000
increased in Accounts payable $23,000
Net Cash Flow from Operating Activities $155,000
Note: Dividend paid compute under financing activities.
The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $5,140. During October, the total cash deposited was $39,175, and checks written totaled $40,520. The bank statement indicated a balance of $8,980 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: a. Checks outstanding totaled $5,560. b. A deposit of $1,050 representing receipts of October 31, had been made too late to appear on the bank statement. c. The bank had collected for Coastal Bike Co. $2,120 on a note left for collection. The face of the note was $2,000. d. A check for $370 returned with the statement had been incorrectly charged by the bank as $730. c. A check for $310 returned with the statement had been recorded by Coastal Bike Co. as $130. The check was for the payment of an obligation to Rack Pro Co. on account. e. Bank service charges for October amounted to $25. f. A check for $880 from Bay View Condos was returned by the bank due to insufficient funds.
Answer:
Explanation:
Bike Co.
Bank Reconciliation
Cash balance according to Bank statement 8,980
Add:Deposits of May 31,not recorded by bank 1,050
Add:Bank error in charging checks as 730instead of $370 360 1,410
10,390
Deduct:checks outstanding 5,560
Adjusted balance 4,830
Cash balance according to company records 3795 (5140+39175-40520)
Add:collection of note 2,120
5915
Deduct: Error in recording cheque (310-130) 180
Bank service charge 25
NSF 880 1,085
Adjusted balance 4,830
2) Journal entries'
a 31-May Cash 2,120
Note receivable 2,000
interest revenue 120
b. 31-May Accounts payable-rack pro co 180
Miscellaneous expense 25
account receivable 880
cash 1,085
3) 4,830
Hancock Medical Supply Co., earned $90,500 of revenue on account during Year 1, its first year of operation. During Year 1, Hancock collected $71,400 of cash from its receivables accounts. The company did not write-off any uncollectible accounts. It estimates that it will be unable to collect 1% of revenue on account. What is the net realizable value of receivables that will be reported on the balance sheet at December 31, Year 1
Answer:
$18,195
Explanation:
The computation of the net realizable value is shown below:
As we know that
Net Realizable Value of Receivables = Ending Accounts Receivable - Estimated Uncollectibles amount
where,
Ending balance of Accounts Receivable is
= Revenue on Account - Accounts collected
= $90,500 - $71,400
= $191,00
And,
Estimated Uncollectibles i.e Bad debt Expense is
= Revenue on Account × given percentage
= $90,500 × 1%
= $905
So, the net realizable value is
= $19,100 - $905
= $18,195
We simply applied the above formula
With your team you are working on a project that is supposed to be completed in FOUR months. You planned that EACH MONTH you are going to spend $15000 on the work for the month. At the end of the FIRST month you have spent the expected amount of $15000, but you have completed only two thirds (2/3) of the work. Answer the following questions: a) What is the Earned Value at the end of the first month. b) Calculate the Cost Variance and the Schedule Variance c) Calculate the Cost Performance Index and the Schedule Performance Index d) Analyze the progress of the project. Is the project behind or on schedule
Answer:
(a). $10000.
(b). Cost variance and Scheduled variance = -$5000.
(c). 0.66 and 0.66.
(d). task is behind schedule and the task is over budget.
Explanation:
(a). Earned value at the end of the first month can be calculated by using the formula below;
= A × B.
Where A = first month budget and B = rate at which the work is getting completed.
Earned value at the end of the first month = 15000× (2/3)
Earned value at the end of the first month = $10000
(b). The Cost Variance and the Schedule Variance can be calculated using the formula below;
Cost variance = Earned value at the end of the first month - monthly budget
Cost variance= 10000 - 15000
Cost variance = -$5000
Also, the Scheduled variance = Earned value at the end of the first month - monthly budget
= 10000 - 15000
= - $5000
(c). The cost Performance Index and the Schedule Performance Index can be calculated by using the formula below;
Cost performnace index = 10000 / 15000
= 0.66
Schedule performance index = the amount Earned / the amount that was planned.
Schedule performance index = 10000 / 15000
= 0.66.
(d). Since both schedule performance index and the Cost performance index are less than one that is 0.66, task is behind schedule and the task is over budget respectively.
Medallion Cooling Systems, Inc., has total assets of $9,800,000, EBIT of $2,050,000, and preferred dividends of $201,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment:
Capital structure/debt Cost of debt Number of stock shares Rate of return
0% 0% 200,000 12.3%
15 7.8 175,000 13.1
30 9.1 140,000 14.2
45 12.1 111,000 16.3
60 15.2 75,000 20.1
Calculate earnings per share for each level of indebtedness.
Answer:
Earnings per share:
0% debt = $5.145 per share
15% debt = $5.487 per share
30% debt = $6.203 per share
45% debt = $6.386 per share
60% debt = $6.570 per share
Explanation:
The earnings per share is the monetary value of how much each share of common stock outstanding has earned. The earnings per share can be calculated by dividing the Net Income attributable to common stockholders by the number of common stock shares outstanding.
Net Income attributable to Common stockholders = Net Income - Preferred stock dividends
Thus, Earnings per share = (Net Income - Preferred stock dividends) / Number of common stock shares outstanding
To calculate Earnings per share at each level of indebtedness, we first need to calculate the net income at each debt level. The net income will change as interest is deducted before calculating net income.
Net Income = EBIT - interest - tax
Total debt = Total assets * weightage of debt in capital structure
Tax = EBT * tax rate
a. 0% debt
Net Income = 2,050,000 - 0 - (2050000 * 0.4) = $1,230,000
Earnings per share = (1230000 - 201000) / 200000 = $5.145 per share
b. 15% debt
Total debt = 9,800,000 * 0.15 = 1470000
EBT = 2,050,000 - (1470000 * 0.078) = $1935340
Net Income = 1935340 - ( 1935340 * 0.4) = $1161204
Earnings per share = (1161204 - 201000) / 175000 = $5.487 per share
c. 30% debt
Total debt = 9,800,000 * 0.30 = 2940000
EBT = 2050000 - (2940000 * 0.091) = $1782460
Net Income = 1782460 - (1782460 * 0.4) = $1069476
Earnings per share = (1069476 - 201000) / 140000 = $6.203 per share
d. 45% debt
Total debt = 9,800,000 * 0.45 = 4410000
EBT = 2050000 - (4410000 * 0.121) = $1516390
Net Income = 1516390 - (1516390 * 0.4) = $909834
Earnings per share = (909834 - 201000) / 111000 = $6.386 per share
e. 60% debt
Total debt = 9,800,000 * 0.60 = 5880000
EBT = 2050000 - (5880000 * 0.152) = $1156240
Net Income = 1156240 - (1156240 * 0.4) = $693744
Earnings per share = (693744 - 201000) / 75000 = $6.570 per share
Described below are certain transactions of Crane Company for 2021:
1. On May 10, the company purchased goods from Fox Company for $76,800, terms 2/10, n/30. Purchases and accounts payable are recorded at net amounts. The invoice was paid on May 18.
2. On June 1, the company purchased equipment for $94,800 from Rao Company, paying $33,600 in cash and giving a one-year, 9% note for the balance.
3. On September 30, the company discounted at 11% its $200,000, one-year zero-interest-bearing note at Virginia State Bank, receiving $180,000.
Required:
(a) Prepare the journal entries necessary to record the transactions above using appropriate dates.
Answer and Explanation:
a. The journal entries are shown below:
On May 10
Merchandise inventory Dr $75,924 ($76,800 × 0.98)
To Account payable $75,924
(Being merchandise inventory is purchased on account)
For recording this we debited the merchandise inventory as it increased the assets and credited the account payable as it also increased the liabilities
On May 18
Account payable Dr
To Cash
(Being the cash paid is recorded)
For recording this we debited the account payable as it decreased the liabilities and credited the cash as it reduced the assets
2. On June 1
Equipment Dr $94,800
To cash Dr $33,600
To 9% Note payable $61,200
(Being the equipment is purchased on cash and note payable)
For recording this we debited the equipment as it increased the assets and credited the account payable and cash as it also increased the liabilities and reduced the assets
3. On Sep 30
Cash Dr $180,000
Discount on note payable $20,000
To Note payable $200,000
(Being the interest bearing note is recorded)
For recording this we debited the cash as it increased the assets and credited the note payable as it also increased the liabilities and the difference is debited to note payable
In conducting the audit procedures for the search for unrecorded liabilities, the materiality/scope for this area was accessed by the auditors at $5,000. Adjustments are only recorded for individual items equal to or exceeding materiality. The company fiscal year end is December 31, 2019 and the last day of fieldwork is estimated to be February 1, 2020. Below is an item from the check/cash disbursement register, which is not recorded in the accounts payable subsidiary ledger at December 31, 2019. Daniel Breen, Esquire Check Number 1334 Check Date 1/6/2020 Amount $6,000 Nature of the Expenses: Corporate legal services for December 2019 Required: Determine if this check/cash disbursement is recorded in the proper accounting period. This transaction requires an accounting adjustment to the financial statements for the fiscal year ending 12/31/2019 - If you believe that statement is correct - answer "Yes" This transaction does NOT require an accounting adjustment to the financial statements for the fiscal year ending 12/31/2019 - If you believe that statement is correct - answer "No."
Answer:
"No."
This transaction does NOT require an accounting adjustment to the financial statements for the fiscal year ending 12/31/2019 - If you believe that statement is correct - answer "No."
Explanation:
The check disbursement does not require an adjustment to the financial statements for the fiscal year ending 12/31/2019, because the check is dated 1/6/2020.
Adjusting entries are changes to the journal entries which tries to match transactions to their correct accounting periods. A check dated January 6, 2020 does not belong to the fiscal year ending December, 2019.
Adjusting entries are usually for Accrued Revenue, Accrued Expenses, Deferred Revenue, Prepaid Expenses, and Depreciation Expenses.
The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year. Manufacturing Overhead (a) 486,144 (b) 405,120 Bal. 81,024 Work in Process Bal. 10,880 (c) 754,000 298,500 90,500 (b) 405,120 Bal. 51,000 Finished Goods Bal. 39,000 (d) 662,000 (c) 754,000 Bal. 131,000 Cost of Goods Sold (d) 662,000 The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows: Work in Process, ending $ 24,480 Finished Goods, ending 62,880 Cost of Goods Sold 317,760 Overhead applied $ 405,120 For example, of the $51,000 ending balance in work in process, $24,480 was overhead that had been applied during the year. Required: 1. Identify reasons for entries (a) through (d). 2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry. 3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.
Answer and Explanation:
As per the data given in the question,
1.
a) Cost of goods manufactured.
b) Cost of goods sold.
c) Overhead cost applied to work in process
d) Actual manufacturing overhead cost.
2. Journal Entry
Manufacturing overhead A/c Dr. 81,024
To cost of goods sold A/c. 81,024
3.
Work in process ending $24,480 =6.04%
Finished goods ending $62,880 =15.52%
Cost of goods sold $317,760 =78.44%
Total cost $405.120 =100%
To calculate overhead allocation :
Work in process ending = ($81,024× 6.04%) =$4,894
Finished goods ending = ($81,024 × 15.52%) =$12,575
Cost of goods sold = ($81,024 × 78.44%) = $63,355
Total cost = $81,024
Journal Entry
Manufacturing overhead A/c Dr. 81,024
To work in process A/c. $4,893
To finished goods A/c. $12,575
To cost of goods sold A/c. $63,555
Granite State Airlines serves the route between New York and Portsmouth, NH, with a single-flight-daily 100-seat aircraft. The one-way fare for discount tickets is $100, and the one-way fare for full-fare tickets is $150. Discount tickets can be booked up until one week in advance, and all discount passengers book before all full-fare passengers. Over a long history of observation, the airline estimates that full-fare demand is normally distributed, with a mean of 56 passengers and a standard deviation of 23, while discount-fare demand is normally distributed, with a mean of 88 passengers and a standard deviation of 44.
a) A consultant tells the airline they can maximize expected revenue by optimizing the booking limit. What is the optimal booking limit? (Hint: Use the standard normal cumulative distribution table)
b) The airline has been setting a booking limit of 44 on discount demand, to preserve 56 seats for full-fare demand. What is their expected revenue per flight under this policy? (Hint: First find the expected revenue when b= 0. Here you can assume Probability{df = k} = Ff(k+0.5) – Ff(k-0.5) and use a spreadsheet. Then using the recursive formula, find the expected revenue if b is increased by 1 until it reaches b=44 using a spreadsheet)
c) What is the expected gain from the optimal booking limit over the original booking limit?
d) A low-fare competitor enters the market and Granite State Airlines sees its discount demand drop to 44 passengers per flight, with a standard-deviation of 30. Full-fare demand is unchanged. What is the new optimal booking limit?
Answer:
Given data: One flight with total seats = 100
Full fare passengers, cost per ticket=$150, mean=56 passengers, SD=23
Discount fare passengers, cost per ticket=$100, mean=88 passengers, SD=44
(a) Here, though there is a hint to use the CDF, since the confidence interval is not given we will make some simplying assumptions that will reduce the complexity of the question, of course keeping the question statistically correct.
this question wants us to maximize total revenue per flight (one way), we can do that by taking only full fare passengers or total revenue will be 150*100=$15,000, but since historical probability shows a mean of 56 with a standard deviation of 23, we can assume in best case scenario total full fare ticket passengers will be 56+23=79, leaving 21 tickets for discount passenger, in this case the total revenues will be 79*150+21*100=$13,950
(b) Now, the new constrained policy is giving a clear cut number of seats to each category of pasengers, 44 for discount (total revenues 44*100) and 56 for full fare (total revenues 56*150) both of which are within the probabilities given earlier (full fare mean=56, discount mean=88). Total revenues in case will be 44*100+56*150=$12,800.
(c) Gain is the difference of the excess revenues in both cases of optimal total revenues and limited seats policy or answer (a) - answer (b) = $13,950- $12,800=$1,150
(d) Realistically speaking, there is no answer for this question without a clear cut confidence interval. Another simplifying assumption we can make here is taking the mean passengers as expected bookings (can be tweaked once confidence interval or degree of significance is given). so total revenues in this case will be 44*100 from discount and 56*150 from full fare passengers. That is still similar to answer (c) due to our assumption/lack of constraints, so our optimal booking will be 54 full fare tickets and 44 discount passenger tickets. You can also take worst case scenario by subtracting SD of each passenger type from the mean or go the best case scenario in which SD of full fare will be added to the mean while the pending seats (left over from 100) will be the total to discount fare for optimal revenue collection.
Given knowledge: One flight with a total capacity of 100 passengers.
Passengers paying full fare, the average ticket price of $150, mean of 56 passengers, SD of 23
Participants on a discount price, with a ticket cost of $100, a mean of 88 passengers, and a standard deviation of 44.
(a) Spite of the fact there is a hint to utilize the CDF because statistical power is not supplied, we will make some presumptions to minimize the complexity of the question whilst retaining statistical accuracy.
We can do so by hardly taking full-fare passengers, in which particular instance total revenue will be 150*100=$15,000, but since historical probability shows a mean of 56 with a standard deviation of 23.
we can assume that total full fare ticket passengers will be 56+23=79, leaving 21 tickets for discount passengers, in which case total revenues will be[tex]79\times150+21\times100=\$13,950.[/tex]
(b) This new limited program now assigns a specific number of seats to each passenger category: 44 for discount (total revenues [tex]44\times100[/tex]) and 56 for full-fare (total revenues [tex]56\times150[/tex]), both of which are within the probability (full fare mean=56, discount mean=88).
In this instance, total revenues will be [tex]44\times100+56\times150=\$12,800.[/tex]
(c) Gain is the differential between the excess earnings in both the ideal overall revenue and restricted seat policies or $13,950- $12,800=$1,150.
(d) Without a well-defined standard error, there is no real answer to this question. Another assumption we might make to make things easier is to treat the average passengers as projected bookings. In this instance, total revenues will be 44*100 from discount passengers and 56*150 from full rate passengers.
Due to our assumption/lack of limitations, our ideal booking will be 54 full-price tickets and 44 discount passenger tickets, which is comparable to the solution (c).
You may alternatively go for the worst-case scenario by subtracting the SD of each passenger type from the mean, or the best-case scenario by adding the SD of the full fare to the mean and using the pending seats (leftover from 100) to discount the fare for optimal revenue collection.
To know more about the discounted price of the airline's tickets, refer to the link below:
https://brainly.com/question/14506205
On January 1, 2020, the Concord Company ledger shows Equipment $36,000 and Accumulated Depreciation―Equipment $10,100. The depreciation resulted from using the straight-line method with a useful life of 7 years and salvage value of $5,000. On this date, the company concludes that the equipment has a remaining useful life of only 4 years with the same salvage value. Compute the revised annual depreciation.
Answer:
$5150
Explanation:
Revised Book value =$36000-$10400
=$25600
Salvage value= $5000
Years=4
Annual Depreciation = (Book value - Dep) / Time
=($25600-$5000) / 4
=$20600 / 4
=$5150
The annual depreciation for another 4 years is = $5150
Hey guys please share your opinion:
would you rather have one credit card that you use for everything?
or would you rather have one credit card with a low limit for online purchases and another for everyday purchases?
THANKS
Answer:
I'd rather have one credit card because it'll be easier to have just one then having to take care of 2. also I believe each credit card on it's own has like interest on it? it's more of a hassle too have 2 basically
Explanation:
The stock of Cooper Corporation is 70% owned by Carole and 30% owned by Carole's brother, Chris. During 2017, Chris transferred property (basis of $100,000 and FMV of $120,000) as a contribution to the capital of Cooper. During February 2018, Cooper adopted a plan of liquidation and subsequently made a pro rata distribution of the property back to Carole and Chris. At the time of the liquidation, the property had an FMV of $80,000. What amount of loss can be recognized by Cooper on the distribution of property?
Answer:
$0
Explanation:
Since 100% of Cooper Corporation's stock were owned by Carole and Chris (who are siblings), then no one can recognize any loss or gain from the contribution of property (nor the distribution of property). Under section 351, no gain or loss can be recognized for the contribution of property in exchange for stocks in a controlled corporation.
Since the contribution was made through a carryover basis transaction less than 5 years before the liquidation, the distribution is carried out in the same way.
At the beginning of last year, Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Tari's fixed manufacturing overhead budget variance was $12,000 favorable. Its fixed manufacturing overhead volume variance was $19,200 favorable. Actual direct labor-hours for the year were 625,000. What was Tari's total standard machine-hours allowed for last year's output?
Answer:
The answer is 612800 hours
Explanation:
Solution
Recall that:
At the start of last year, Tari Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours.
At the end of the year, Tari's fixed manufacturing overhead budget variance was $12000 favorable. Its fixed manufacturing overhead volume variance was $19200 favorable. The direct actual labor-hours for the year were 625,000. What was Tari's standard total machine-hours allowed for last year's output?
Now,
The Budgeted at beginning of the year = $900,000
fixed manufacturing overhead for = 600,000 machine hours
Thus,
The Standard = $900,000 / 600,000 hours = $1.5 fixed overhead / machine/machining hour
So,
At end of year, manufacturing overhead volume was $19,200 favorable which means that,
$19200 / $1.5 = 12800 additional hours.
Total Standard Machine Allowance Allowed for output = 600,000 +12800 = 612800 hours
Therefore, Tari's total standard machine-hours allowed for last year's output is 612800 hours
If Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Its fixed manufacturing overhead volume variance was $19,200 favorable. What Tari's total standard machine-hours allowed for last year's output will be is: 612,800 machine hours
Using this formula
Total standard machine-hours=Machine -hours level of activity+ [Fixed manufacturing overhead volume variance÷(Fixed manufacturing overhead÷ Machine -hours level of activity)]
Where:
Machine -hours level of activity=600,000
Fixed manufacturing overhead volume variance=$19,200
Fixed manufacturing overhead=$900,000
Let plug in the formula
Total standard machine-hours=600,000+[$19,200÷($900,000÷600,000)]
Total standard machine-hours=600,000+($19,200÷1.5)
Total standard machine-hours=600,000+12,800
Total standard machine-hours=612,800 machine hours
Inconclusion if Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Its fixed manufacturing overhead volume variance was $19,200 favorable. What Tari's total standard machine-hours allowed for last year's output will be is: 612,800 machine hours
Learn more here:
https://brainly.com/question/17272909
An analysis and aging of the accounts receivable of Raja Company at December 31 reveal these data: Accounts receivable: $800,000 Allowance for doubtful accounts per books before adjustment (credit): $50,000 Amounts expected to become uncollectible : $65,000 What is the cash realizable value of the accounts receivable at December 31, after adjustment? Select one: a. $685,000. b. $750,000. c. $800,000. d. $735,000.
Answer:
The correct option is D,$735,000
Explanation:
The cash realizable value of accounts receivable for the year is the accounts receivable of $800,000 less the amount expected to become uncollectible in the current year which $65,000.
The realizable value of accounts receivable =$800,000-$65,000=$735,000
The allowance for doubtful accounts before adjustment was already dealt with in previous year,I mean the difference between last year allowance and this year was accounted for by posting $15,000 into allowance account thereby leading a closing balance of $65,000.
According to the Air Transport Association of America, the average operating cost of an MD-80 jet airliner is $2,087 per hour. Suppose the operating costs of an MD-80 jet airliner are normally distributed with a standard deviation of $174 per hour. (Round the value of z to 2 decimal places. Round your answers to 2 decimal places.) (a) At what operating cost would only 23% of the operating costs be less? $Entry field with correct answer 1958.44 (b) At what operating cost would 65% of the operating costs be more? $Entry field with correct answer 2019.95 (c) What operating cost would be more than 85% of operating costs ?
Answer:
(a)$1955
(b)$2017.19
(c)$2273.16
Explanation:
Check attachment
Analysis reveals that a company had a net increase in cash of $22,750 for the current year. Net cash provided by operating activities was $20,500; net cash used in investing activities was $11,250 and net cash provided by financing activities was $13,500. If the year-end cash balance is $27,750, the beginning cash balance was: Multiple Choice $5,000. $17,750. $50,500. $45,500. $44,500.
Answer:
The correct answer = $5,000
Explanation:
First of all, let us find the difference between the total cash provided and the total cash used up within the period:
Total cash provided = operating activities + financing activities
Total cash provided = 20,500 + 13,500 = $34,000
Total cash used up = investing activities = $11,250
Retained balance from the activities of the period = Total cash provided - Total cash used up
= 34,000 - 11,250 = $22,750
Retained balance from the activities of the period = $22,750
However, we are told that the year-end cash balance = $27,750. This means that the excess cash on the retained balance from operating activities within the period is from the beginning cash balance, and this is calculated as follows:
year-end cash balance = Retained balance from the activities + beginning cash balance
27,750 = 22,750 + beginning cash balance
∴ beginning cash balance = 27,750 - 22,750 = $5,000
∴ beginning cash balance = $5,000
(Ignore income taxes in this problem.) James just received an $8,000 inheritance check from the estate of his deceased uncle. James wants to set aside enough money to pay for a trip in five years. If the trip is expected to cost $5,000 and the rate of return is 12 percent per year, how much of the $8,000 must James deposit now to have the $5,000 in five years
Answer:
$2837.13
Explanation:
The account value is multiplied by 1 +12% = 1.12 each year, so at the end of 5 years, it will have been multiplied by 1.12^5. For some investment P, we want ...
5000 = P×1.12^5
5000/1.12^5 = P ≈ $2837.13
James must deposit about $2837.13 now to have the required amount in 5 years.
