Answer:
Net operating income= 27,000
Explanation:
Giving the following information:
Units produced 20,000
Units sold 19,000
Selling price per unit $100.00
Variable costs per unit:
Direct materials $12.00
Direct labor $25.00
Variable manufacturing overhead $3.00
Variable selling and administrative $2.00
Fixed expenses per year:
Fixed manufacturing overhead $500,000
Fixed selling and administrative $600,000
Under the absorption costing method, the fixed manufacturing overhead gets included in the unitary production cost. First, we need to calculate the unitary product cost.
Unitary product cost= (12 + 25 + 3) + (500,000/20,000)
Unitary product cost= 40 + 25= $65
Income statement:
Sales= 100*19,000= 1,900,000
COGS= 65*19,000= (1,235,000)
Gross profit= 665,000
Variable selling and administrative= (2*19,000)=(38,000)
Fixed selling and administrative= (600,000)
Net operating income= 27,000
Ahmed, a lawyer, sold his car to Carlos. Has an implied warranty of merchantability been created by this transaction? No, because Ahmed is not a merchant. Yes, because if the car is defective Carlos will have a right to return in to Ahmed. No, Ahmed has not implied so either orally or in written. Yes, because a car is "goods" and the Uniform Commercial Code applies to contracts for the sale of goods.
Answer:
A. No, because Ahmed is not a merchant.
Explanation:
Implied warranty of merchantability is a law in contract which states that when there is a transaction between a seller (the merchant), and a buyer, there is an unwritten guarantee from the seller, that the product meets up to the ordinary standards of care. This means that the goods must be fit to do what the merchant says it will do. Therefore, if the seller finds it defective, he could return it to the seller. and if the seller refuses to make a change, a legal case could be established. The merchant by law is a wholesaler or retailer, who sells goods in which he has expertise or special skills.
Ahmed in the question could be argued in court to not be a merchant of cars and as such, has no expertise with which he can make a guarantee for the car being sold to Carlos.
Enviro Company issues 8%, 10-year bonds with a par value of $300,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 1/2. The straight-line method is used to allocate interest expense. 1. Using the implied selling price of 87 ½, what are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date?
Answer:
1. Issuer's cash is $262,500
2. Total amount of bond interest is $277,500
3. The amount of bond interest expense is $13,875.
Explanation:
1. Issuer's cash = Face Value × Selling Price
Issuer's cash = $300,000 × 87.50%
Issuer's cash = $262,500
2. Discount on bond = $300,000 × 12.5% = $37,500
Interest on bond = $300,000 × 8% = $24,000
Period of bonds= 10 years
Total amount of bond interest = Discount on Bond + (Interest on Bond × period)
Total amount of bond interest = $37,500 + ($24,000 × 10)
Total amount of bond interest = $277,500
3. Discount on bond = $300,000 × 12.5% = $37,500
Interest on bond = $300,000 × 8% = $24,000
Period = 0.5 years
The amount of bond interest expense = (Discount of Bond ÷ 20) + Interest
The amount of bond interest expense = ($37,500 ÷ 20) + ($24,000 × 0.5)
The amount of bond interest expense = $1,875 + $12,000
The amount of bond interest expense = $13,875.
For the year ended December 31, 2016, Norstar Industries reported net income of $655,000. At January 1, 2016, the company had 900,000 common shares outstanding. The following changes in the number of shares occurred during 2016: Apr. 30 Sold 60,000 shares in a public offering. May 24 Declared and distributed a 5% stock dividend. June 1 Issued 72,000 shares as part of the consideration for the purchase of assets from a subsidiary. Required: Compute Norstar's earnings per share for the year ended December 31, 2016.
Answer:
1.272 per share
Explanation:
The computation of earnings per share is shown below:-
Weighted Average number of Common shares outstanding = outstanding common shares ÷ Net income
= 900,000 ÷ $707,810
= 1.272 per share
Where,
Net Income = Preferred Dividends ÷ Weighted Average number of Common shares outstanding
= $655,000 ÷ (1 + 0.05) + ( 60,000 × 8 months ÷ 12 months) × 1.05 + (72,000 × 7 months ÷ 12 months)
= $623,810 + 40,000 × 1.05 + 42,000
= $623,810 + 42,000 + 42,000
= 707,810
Monte Services, Inc. is trying to establish the standard labor cost of a typical brake repair. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the brake repairs 5 hours Hourly wage rate $12 Payroll taxes 20% of wage rate Setup and downtime 11% of actual labor time Cleanup and rest periods 27% of actual labor time Fringe benefits 25% of wage rate Determine the standard direct labor hours per brake repairs.
Answer:
=7:30hours
Explanation:
Standard direct labor hours per brake repair
= 5 Hours+(5*11%+5*27%)
=5 Hours + (0.55 hours + 1.35hours)
=7:30hours
Assume there is a decrease in the market demand for a good sold by price-taking firms that are initially producing the profit-maximizing level of output. How will the market adjust over time? Firms will exit the market, causing price to fall until positive profits are eliminated. Firms will exit the market, causing price to rise until losses are eliminated. Firms will enter the market, causing price to rise until losses are eliminated. Firms will enter the market, causing price to fall until positive profits are eliminated.
Answer: Firms will exit the market, causing price to rise until losses are eliminated
Explanation:
When there is a decrease in demand in a Perfectly Competitive Market, firms will have to start producing at a lower Quantity to manage their Marginal cost. This leads to Economic losses on their part in the short run.
In the long run however, should the situation remain the same, the new price would be less than their Average Cost which would deepen Economic losses. Firms would respond by exiting the market in the long run.
As the firms exit, the supply curve shifts left as supply drops. This drop in supply leads to a price rise. The exits will continue until enough firms leave that the market's remaining firms will stop suffering economic losses.
Leon Jones worked in the warehouse of a large building supply company. One day he unexpected left for Fiji, never to return. His supervisor seized the opportunity to continue submit time cards for Leon to the payroll department. Each week, as part of his normal duties, the supervisor received the employee pay cheques from payroll and distribute them to the workers on his shift. As Leon was not present to collect his pay cheque, the supervisor forged Leon’s name and cashed it.
Required: Describe two control techniques to prevent or detect this fraud scheme. (10 marks, maximum 300 words)
Answer:
Explanation:
This is an example of payroll fraud.
Pay roll fraud is a fraudulent practice where an employees take an advantage of a loophole in the internal control system to claim payment that they are not entitled to. One way of practicing it is by keeping record ghost workers
Two methods of controlling it are
A clock -in-system : This requires an employee to use a unique pass code to sign in and our of work . Some technology even finger print for this purpose which strictly restrict signing in to the assigned user . This information are used for payment process
Another method is the direct deposit of pay checks into employees bank account . This method will prevent and other person to divert pay checks for other use.
The Converting Department of Hopkinsville Company had 1,200 units in work in process at the beginning of the period, which were 75% complete. During the period, 25,200 units were completed and transferred to the Packing Department. There were 1,360 units in process at the end of the period, which were 25% complete. Direct materials are placed into the process at the beginning of production. Determine the number of equivalent units of production with respect to direct materials and conversion costs. If an amount is zero, enter in "0".
Answer:
Equivalent Units
Material cost = 26,560
Conversion Cost= 25,540
Explanation:
We would assume the company uses weighted average method of valuation.
Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked.
Equivalent units = Degree of completion (%) × Number of units
Material cost
Item Unit Equivalent unit
Completed 25,200 100% ×25200 = 25,200
Closing WIP 1,360 100%× 1,360 1360
Total equivalent units 26,560
Conversion Cost
Item Unit Equivalent unit
Completed 25,200 100% ×25200 = 25,200
Closing WIP 1,360 25%× 1,360 340
Total equivalent units 25,540
On January 1, 2021, Swifty Corporation had 106000 shares of its $5 par value common stock outstanding. On June 1, the corporation acquired 10300 shares of stock to be held in the treasury. On December 1, when the market price of the stock was $13, the corporation declared a 15% stock dividend to be issued to stockholders of record on December 16, 2021. What was the impact of the 15% stock dividend on the balance of the retained earnings account?
Answer:
Decrease by $186,615
Explanation:
The impact of the 15% stock dividend on the balance of the retained earnings account is shown below:-
Shares = 106000 - 10300
= 95,700
Dividend of 15% = 95,700 × 15%
= $14,355
Value of shares = Dividend × Market price of the stock
= $14,355 × $13
= $186,615
So, the retained earning will decrease by $186,615
Equipment with a book value of $78,000 and an original cost of $168,000 was sold at a loss of $31,000. Paid $106,000 cash for a new truck. Sold land costing $315,000 for $420,000 cash, yielding a gain of $105,000. Long-term investments in stock were sold for $90,000 cash, yielding a gain of $15,500. Use the above information to determine this company's cash flows from investing activities. (Amounts to be deducted should be indicated with a minus sign.)
Answer:
$451,000
Explanation:
The computation of cash flows from investing activities is shown below:-
Sale of equipment $47,000
($78,000 - $31,000)
Purchase of new truck ($106,000)
Sale of land $420,000
Sale of Long-term investments $90,000
Net cash provided by investing activities $451,000
Therefore to reach the cash flows from investing activities we simply added the sale of equipment, sale of land, sale of long term investments and deduct the purchase of new truck.
Scenario 28-1 Suppose that the Bureau of Labor Statistics reports that the entire adult population of Mankiwland can be categorized as follows: 25 million people employed, 3 million people unemployed, 1 million discouraged workers, and 1 million people who are either students, homemakers, retirees, or other people not seeking employment. Refer to Scenario 28-1. What is the unemployment rate?
Answer:
10.7%
Explanation:
Solution:
Recall that:
The Reports from Bureau of labor statistics is shown as follows:
Employed people = 25 million
Unemployed people = 3 million
Discouraged workers = 1 million
Workers or Homemakers or retirees, or students = 1 million
The next step from this scenario is to find out the unemployment rate
Now,
The rate of unemployed = (unemployed x 100 ) / labor force
= 300/28
=10.7%
11. a. Suppose David spends his income M on goods x1 and x2, which are priced p1 and p2, respectively. David’s preference is given by the utility function
(1, 2) = √1 + √2.
(i) Derive the Marshallian (ordinary) demand functions for x1 and x2. (25 marks)
(ii) Show that the sum of all income and (own and cross) price elasticity of demand
for x1 is equal to zero. (25 marks) b. For Jimmy both current and future consumption are normal goods. He has strictly convex and strictly monotonic preferences. The initial real interest rate is positive. If the real interest rate falls, in each of the following cases, argue what will happen to his period 2 consumption level? Clearly illustrate your argument on a graph.
(i) He is initially a borrower. (25 marks)
(ii) He is initially a lender. (25 marks)
Answer:
Explanation:
D
Marquis Company estimates that annual manufacturing overhead costs will be $900,000. Estimated annual operating activity bases are direct labor cost $500,000, direct labor hours 50,000, and machine hours 100,000. Compute the predetermined overhead rate for each activity base. (Round answers to 2 decimal places, e.g. 10.50% or 10.50.) Overhead rate per direct labor cost enter percentages rounded to 2 decimal places % Overhead rate per direct labor hour $enter a dollar amount rounded to 2 decimal places Overhead rate per machine hour $enter a dollar amount rounded to 2 decimal places
Answer:
Basis Rate
Labour hour $18 per direct labour
Machine hour $9 per machine hour
Budgeted labour cost 180% of labour cost
Explanation:
Predetermined overhead absorption rate=
Estimated Overhead for the period/Estimated activity level
Labour hour basis
Estimated Overhead for the period/Estimated labour hours
= $900,000/50,000
=$18 per direct labour
Machine hour basis
Estimated Overhead for the period/Estimated machine hours
Overhead rate per machine hour = $900,000/100,000 hours
=$9 per machine hour
Direct labour cost basis
Pre-determined overhead rate = Estimated Overhead for the period/Estimated labour cost
=$900,000/($500,000)×100
=180 % of labour cost
Basis Rate
Labour hour =$18 per direct labour
Machine hour =$9 per machine hour
Budgeted labour cost 180% of labour cost
Current liabilities are obligations that are reasonably expected to be paid from Existing Creation of Other Current Assets Current Liabilities a. No No b. Yes Yes c. Yes No d. No Yes
Answer:
The answer is option C) Yes No
Explanation:
Current liabilities are obligations that are reasonably expected to be paid from Existing Creation of Other Current Assets and not current liabilities.
This is because, Current liabilities are short term liabilities due within a year. They include accounts payable, short term debt and overdraft. This means that payment can only be generated by current assets.
Current assets are also short term assets with a life span of on year. They include accounts receivable an cash.
Therefore, Yes, Current liabilities are obligations that are reasonably expected to be paid from Existing Creation of Other Current Assets.
And No, Current liabilities are obligations that are not expected to be paid from Existing Creation of Other Current Liabilities.
In Q1 2018, CNA Companies reports the following transactions: Capital expenditures of $15 million Loss on sale of equipment of $6 million Debt principal repayment of $8 million Preferred dividend of $2 million Common dividend of $3 million Share buyback of $4 million Ignoring the effect of taxes, what is the impact of these transactions on retained earnings
Answer:
-$11 million
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the impact of transactions on retained earnings by using following formula:-
Impact of transactions on retained earnings = - common dividend - preferred dividend - loss on sale of equipment
= -$3 million - $2 million - $6 million
= - $11 million
All three items should be deducted as it has a negative impact on the retained earnings
The balance sheets for Plasma Screens Corporation and additional information are provided below. PLASMA SCREENS CORPORATION Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 242,000 $ 130,000 Accounts receivable 98,000 102,000 Inventory 105,000 90,000 Investments 5,000 3,000 Long-term assets: Land 580,000 580,000 Equipment 890,000 770,000 Less: Accumulated depreciation (528,000 ) (368,000 ) Total assets $ 1,392,000 $ 1,307,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 109,000 $ 95,000 Interest payable 7,000 13,000 Income tax payable 9,000 6,000 Long-term liabilities: Notes payable 110,000 220,000 Stockholders' equity: Common stock 800,000 800,000 Retained earnings 357,000 173,000 Total liabilities and stockholders' equity $ 1,392,000 $ 1,307,000 Additional information for 2021: Net income is $184,000. Sales on account are $1,890,000. Cost of goods sold is $1,394,250. Required: 1. Calculate the following risk ratios for 2021:
Answer and Explanation:
The risk ratios are calculated below:
1. Account Receivable Turnover
= Net credit Sales ÷ Average Accounts Receivable
= $1,890,000 ÷ (($98,000 + $102,000) ÷ 2)
= $1,890,000 ÷ $100,000
= 18.9 times
It shows the relation between the net credit sales and the average account receivable
2. Inventory Turnover = Cost of Goods Sold ÷ Average Inventory
= $1394250 ÷ (($105,000 + $90,000) ÷ 2)
= $1,394,250 ÷ $97,500
= 14.3 times
It shows the relation between the cost of goods sold and the average inventory
c. Current Ratio = Current assets ÷ Current Liabilities
= ($242,000 + $98,000 + $105,000 + $5,000) ÷ ($109,000 + $7,000 + $9,000)
= $450,000 ÷ $125,000
= 3.6 times
It shows the relation between the current assets and the current liabilities
d. Acid Test Ratio = Liquid assets ÷ Current Liabilities
= ($450,000 - $105,000) ÷ ($125,000 )
= $345,000 ÷ $125,000
= 2.76 times
It shows the relation between the liquid assets which do not involved prepaid assets, inventory, etc and the current liabilities
e. Debt to Equity = Debt ÷ Equity
= ($109,000 + $7,000 + $9,000 + $110,000) ÷ ($800,000 + $357,000 )
= $235,000 ÷ $1,157,000
= 0.203
It shows the relation between the debt and equity
1. Account Receivable Turnover
= Net credit Sales ÷ Average Accounts Receivable
= $1,890,000 ÷ (($98,000 + $102,000) ÷ 2)
= $1,890,000 ÷ $100,000
= 18.9 times
It represents the relationship between the net credit sales and the average account receivable.
2. Inventory Turnover = Cost of Goods Sold ÷ Average Inventory
= $1394250 ÷ (($105,000 + $90,000) ÷ 2)
= $1,394,250 ÷ $97,500
= 14.3 times
It represents the relationship between the cost of goods sold and the average inventory.
c. Current Ratio = Current assets ÷ Current Liabilities
= ($242,000 + $98,000 + $105,000 + $5,000) ÷ ($109,000 + $7,000 + $9,000)
= $450,000 ÷ $125,000
= 3.6 times
It represents the relationship between the current assets and the current liabilities.
d. Acid Test Ratio = Liquid assets ÷ Current Liabilities
= ($450,000 - $105,000) ÷ ($125,000 )
= $345,000 ÷ $125,000
= 2.76 times
It represents the relationship between the liquid assets in which it does include prepaid assets, inventory, etc and the current liabilities.
e. Debt to Equity = Debt ÷ Equity
= ($109,000 + $7,000 + $9,000 + $110,000) ÷ ($800,000 + $357,000 )
= $235,000 ÷ $1,157,000
= 0.203
It represents the relationship between the debt and equity.
Learn more: brainly.com/question/19682087
According to an article in the Wall Street Journal, KB Home and other builders found demand for new houses increasing in 2017 as a result of an increase in the formation of new households. In the long run, formation of new households depends on population growth. Source: Laura Kusisto and Sarah Chaney, "U.S. Housing Starts Fell in April for Third Time in Four Months," Wall Street Journal, May 16, 2017. Are firms like homebuilders that sell products whose demand depends partly on demographic factors likely to be more or less affected by the business cycle than are other firms whose products are less dependent on these factors (holding constant other factors that affect the demand for new houses)? Briefly explain.
Answer:
Generally speaking, demographic growth can affect the economy quite a lot, but the economy has a very little effect on demographic growth. E.g. the baby boomers were great for the economy during several decades, but there is no clear relationship between population growth and economic activity.
This means that companies like home builders whose demand depends on other factors besides the economy, will be less affected by economic recessions or expansions. E.g. the demographic growth in America was around 0.7% during 2019 and the economy was growing that year.
Actually, the US population has been declining over the last decades. The real growth factor in population has been immigration in the last decades, and that has also been declining lately.
Gilberto Company currently manufactures 50,000 units per year of one of its crucial parts. Variable costs are $2.00 per unit, fixed costs related to making this part are $50,000 per year, and allocated fixed costs are $40,000 per year. Allocated fixed costs are unavoidable whether the company makes or buys the part. Gilberto is considering buying the part from a supplier for a quoted price of $3.20 per unit guaranteed for a three-year period. Calculate the total incremental cost of making 50,000 and buying 50,000 units. Should the company continue to manufacture the part, or should it buy the part from the outside supplier
Answer:
Net incremental cost of buying (10,000). \
Gilberto Company should produced the parts internally . Doing so would saving its $10,000 per year
Explanation:
The relevant cash flow from the accepting the offer of the outside suppliers include
Extra variable cost of buying
Savings in direct fixed manufacturing overhead
Unit variable cost of making: =$2
$
Variable cost of external purchase ($3.2× 50,000) 160,000
Variable cost of making ($2× 50,000) (100,000 )
Extra variable cost of buying (60,000 )
Savings in direct fixed cost 50,000
Net incremental cost of buying (10,000)
Monopoly power runs counter to the public interest because it leads to high prices, resource misallocation, and inefficiency. Antitrust policy is one of the government's instruments for curbing monopoly power and protecting competition.
Suppose that a major tire retailer purchases a major manufacturer's car tires at a discount on the condition that it must also purchase the manufacturer's truck tires. As a result of the agreement, several tire manufacturers lose their market shares and eventually exit the industry. This agreement would explicitly violate which of the following laws?
The Clayton Act of 1914
The Sherman Antitrust Act of 1890
The Robinson–Patman Act of 1936
The Celler–Kefauver Act of 1950
Answer:
C. The Robinson–Patman Act of 1936
Explanation:
The Robinson-Patman Act of 1936 is an amendment to The Clayton Act of 1914, which particularly prohibits price discrimination. Price Discrimination is an act in which distributors or sellers of certain goods, give discounts to people who they seem to benefit more from while smaller shops buy the goods at a costlier price.
The instance where the major tire manufacturer has an agreement to make a price discount with the manufacturer of truck tires is an example of price discrimination, and the consequence is that other markets are affected as they now exit the market. This is a clear contravention of the Robinson-Patman Act of 1936.
Beverage International reports net credit sales for the year of $252,000. The company's accounts receivable balance at the beginning of the year equaled $48,000 and the balance at the end of the year equaled $58,000. What is Beverage International's receivables turnover ratio
Answer:
4.8
Explanation:
The formular to find the receivable turn over ratio is
= net credit sales/average.
account receivable
The values given are:
Net credit sales for the year=$252,000
Company account receivable balance at the beginning of the year= $48,000
Company account receivable balance at the end of the year= $58,000
To find the average account receivable we will sum both balance and divide by 2
= 48,000+58,000/2
= 106,000/2
= $53,000
Average account receivable is $53,000
Therefore, receivable turn over ratio is
= $252,000/$53,000
= 4.8
Thus, Beverage international's receivables turn over ratio is 4.8
Minot Corporation is preparing its cash budget for August. The following information is available concerning its accounts receivable: Estimated credit sales for August $ 220,000 Actual credit sales for July $ 167,000 Estimated collections in August for credit sales in August 25 % Estimated collections in August for credit sales in July 70 % Estimated collections in August for credit sales prior to July $ 18,000 Estimated write-offs in August for uncollectible credit sales $ 8,000 Estimated provision for bad debts in August for credit sales in August $ 7,800 Required: What is the estimated amount of cash receipts from accounts receivable collections in August?
Answer:
$189,900
Explanation:
For computation of estimated amount of cash receipts from accounts receivable collections first we need to find out the credit sales in August and credit sales in July which is shown below:-
Credit sales in August = Estimated credit sales × Estimated collections in August for credit sales in August
= $220,000 × 25%
= $55,000
Credit sales in July = Actual credit sales × Estimated collections in August for credit sales in July
= $167,000 × 70%
= $116,900
Total estimated cash receipts from accounts receivable = Credit sales in August +Credit sales in July = Actual credit sales + Credit sales prior to July
= $55,000 + $116,900 + $18,000
= $189,900
A translation adjustment (or translation gain) that is a consequence of translation of a functional currency that is different from the reporting currency should be:_______.
A. Included in net income in the period in which it occurs.
B. Deferred and amortized over a period not to exceed 40 years.
C. Deferred until a subsequent year when a loss occurs and offset it against that loss.
D. Included as a separate item in the equity section of the balance sheet.
Answer:
d
Explanation:
wild guess
Accompanying a bank statement for Borden Company is a credit memo for $21,200 representing the principal ($20,000) and interest ($1,200) on a note that had been collected by the bank. The company had been notified by the bank at the time of the collection but had made no entries. Journalize the entry that should be made by the company to bring the accounting records up to date. If an amount box does not require an entry, leave it blank. Cash Notes Receivable Interest Revenue
Answer: Please refer to Explanation
Explanation:
The above transaction refers to a Note being collected by a bank on behalf of the company. This means that the company's cash balance has therefore increased leading to a journal entry of,
DR Cash $21,200
CR Note Receivables $20,000
CR Interest Revenue $1,200
(To record Note Received by Bank).
Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2021. The inventory as reported at the end of 2020 using LIFO would have been $59,000 higher using FIFO. Retained earnings at the end of 2020 was reported as $770,000 (reflecting the LIFO method). The tax rate is 35%. Required: 1. Calculate the balance in retained earnings at the time of the change (beginning of 2021) as it would have been reported if FIFO had been used in prior years. 2. Prepare the journal entry at the beginning of 2021 to record the change in accounting principle.
Answer:
1. The balance in retained earnings at the time of the change is $808,350
2. The journal entry at the beginning of 2021 to record the change in accounting principle woud be as follows:
Inventoty $59,000
Retained Earnings $38,350
Tax Payable $20,650
Explanation:
1. In order to calculate the balance in retained earnings at the time of the change (beginning of 2021) as it would have been reported if FIFO had been used in prior years we would have to make the following calculation:
balance in retained earnings at the time of the change=Begining Retained earnings of 2021+Adjusted net income
Adjusted net income=Ending inventory higher by amount×(1-tax rate)
Adjusted net income=$59,000×(1-0.35)
Adjusted net income=$38,350
balance in retained earnings at the time of the change=$770,000+$38,350
balance in retained earnings at the time of the change=$808,350
2. The journal entry at the beginning of 2021 to record the change in accounting principle woud be as follows:
Inventoty $59,000
Retained Earnings $38,350
Tax Payable $20,650= $59,000×0.35
Blue Ridge Bicycles uses a standard part in the manufacture of several of its bikes. The cost of producing 40,000 parts is $138,000, which includes fixed costs of $73,000 and variable costs of $65,000. By outsourcing the part, the company can avoid 30% of the fixed costs. If Blue Ridge Bicycles buys the part, what is the most Blue Ridge Bicycles can spend per unit so that operating income equals the operating income from making the part
Answer:
$2.17
Explanation:
The computation of maximum amount per unit is shown below:-
First we need to compute the avoidable fixed coast and total cost of making to reach maximum amount per unit
Avoidable fixed cost = Fixed cost × Fixes cost percentage
= $73,000 × 30%
= $21,900
Total cost of making = Variable cost + Avoidable fixed cost
= $65,000 + $21,900
= $86,900
Maximum amount per unit = Total cost of making ÷ Producing cost
= $86,900 ÷ 40,000
= $2.17
Therefore, for computing the maximum amount per unit we simply divide the total cost of making by producing cost.
On January 1, 2017, Culver Company issued 10-year, $2,060,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Culver common stock. Culverâs net income in 2017 was $291,000, and its tax rate was 40%. The company had 108,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017.Required:(a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.)(b) Compute diluted earnings per share for 2017, assuming the same facts as above, except that $1,080,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Culver common stock.
Bramble Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (6 pounds at $3.10 per pound) $18.60 Direct labor (4 hours at $10.00 per hour) $40.00 During the month of April, the company manufactures 190 units and incurs the following actual costs. Direct materials purchased and used (2,200 pounds) $7,260 Direct labor (770 hours) $7,623 Compute the total, price, and quantity variances for materials and labor. Total materials variance $ Materials price variance $ Materials quantity variance $ Total labor variance $ Labor price variance $ Labor quantity variance $ Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO TEXT
Answer and Explanation:
a. The computation of the material price variance is shown below:
= Actual Quantity × (Standard Price - Actual Price)
= $7,260 × (2,200 pounds × $3.10 per pound)
= $440 unfavorable
b. The computation of the material quantity variance is shown below:
= Standard Price × (Standard Quantity - Actual Quantity)
= $3.10 × (2,200 pounds - (190 units × 6 pounds))
= $3,286 unfavorable
c. Total material variance
= Material price variance + material quantity variance
= $440 unfavorable + $3,286 unfavorable
= $3,726 unfavorable
d. The computation of the labor price variance is shown below:
= Actual Hours × (Actual price - Standard Price)
= $7,623 - (770 hours × $10)
= $77 favorable
e. The computation of the labor quantity variance is shown below:
= Standard Rate × (Actual Hours - Standard hours allowed for actual units)
= $10 × (770 hours - (190 units × 4 hours)
= $100 unfavorable
Total labor variance
= Labor rate variance + labor quantity variance
= $77 favorable + 100 unfavorable
= $23 unfavorable
The production manager of a company, in an effort to gain a promotion, negotiated a new labor contract with the factory employees that required them to bear a greater percentage of benefit costs than before, thus bringing down the cost of direct labor to the company. Shortly afterward, several experienced and highly skilled workers resigned, and were replaced by new employees whose work was very slow during their training period. At the end of the quarter, the company's profits fell 10%. This would produce a(n) ________.
Answer:
Unfavorable Direct labor efficiency variance
Explanation:
Labour efficiency is what every organisation look forward to in order to increase output, quality and maximize profit. In this case, all of that dropped maybe as a result of new experience. For this quarter, the organisation have experience Unfavorable Direct Labor Efficiency Variance.
On January 1, 2021, Tonge Industries had outstanding 480,000 common shares ($1 par) that originally sold for $30 per share, and 6,000 shares of 10% cumulative preferred stock ($100 par), convertible into 60,000 common shares.
On October 1, 2021, Tonge sold and issued an additional 16,000 shares of common stock at $37. At December 31, 2021, there were 22,000 incentive stock options outstanding, issued in 2020, and exercisable after one year for 22,000 shares of common stock at an exercise price of $34. The market price of the common stock at year-end was $52. During the year, the price of the common shares had averaged $44.
Net income was $940,000. The tax rate for the year was 40%.
Required:
Compute basic and diluted EPS for the year ended December 31, 2021. (Enter your answers in thousands.)
Answer:
842,000 shares
Explanation:
Please the solution to the given problem in the file attached below
Answer:
Basic EPS = $1.82
Diluted EPS = $1.72
Explanation:
The picture attached herewith shows the calculation to the problem and it is so explanatory.
The Sandhill Hotel opened for business on May 1, 2022. Here is its trial balance before adjustment on May 31. SANDHILL HOTEL Trial Balance May 31, 2022 Debit Credit Cash $ 2,463 Supplies 2,600 Prepaid Insurance 1,800 Land 14,963 Buildings 71,200 Equipment 16,800 Accounts Payable $ 4,663 Unearned Rent Revenue 3,300 Mortgage Payable 37,200 Common Stock 59,963 Rent Revenue 9,000 Salaries and Wages Expense 3,000 Utilities Expense 800 Advertising Expense 500 $114,126 $114,126 Other data: 1. Insurance expires at the rate of $360 per month. 2. A count of supplies shows $1,070 of unused supplies on May 31. 3. (a) Annual depreciation is $3,000 on the building. (b) Annual depreciation is $2,400 on equipment. 4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.) 5. Unearned rent of $2,510 has been earned. 6. Salaries of $860 are accrued and unpaid at May 31. (a) (b) (c) (d1) (d2) (d3) (e)
Answer:
1. Journalize the adjusting entries on May 31:
Debit Credit
1. Insurance Expense $360
Insurance Prepaid $360
To record insurance expense for the month.
2. Supplies Expense $1,530
Supplies Account $1,530
To record supplies expense for the month.
3a. Depreciation Expense - Building $250
3b. Depreciation Expense - Equipment $200
Accumulated Depreciation - Building $250
Accumulated Depreciation - Equipment $200
To record depreciation charge for the month.
4. Mortgage Interest Expense $186
Mortgage Interest Payable $186
To accrue mortgage interest, 6% for 1 month.
5. Unearned Rent Revenue $2,510
Rent Revenue $2,510
To record rent earned.
6. Salaries & Wages Expense $860
Salaries & Wages Payable $860
To accrue salaries at May 31.
2. Prepare a ledger using the three-column form of account. Enter the trial balance amounts into the balance column and then post the adjusting entries:
No. Description Debit Credit Balance
1. Prepaid Insurance:
As per Trial Balance $1,800
Insurance Expense $360 $1,440
Insurance Expense:
Prepaid Insurance $360 $360
2. Supplies Account:
As per Trial Balance $2,600
Supplies Expense $1,530 $1,070
Supplies Expense:
Supplies Account $1,530 $1,530
3a. Depreciation Exp. - Building $250 $250
Accumulated Deprec-Building $250 $250
3b. Depreciation Exp.- Equipment $200 $200
Accumulated Depre- Equipment $200 $200
4. Mortgage Interest Expense $186 $186
Mortgage Interest Payable $186 $186
5. Unearned Rent:
As per Trial Balance $3,300
Rent Revenue $2,510 $790
Rent Revenue:
As per Trial Balance $9,000
Unearned Rent $2,510 $11,510
6. Salaries & Wages Expense:
As per Trial Balance $3,000
Salaries & Wages Payable $860 $860
Salaries & Wages Payable:
Salaries & Wages Expense $860 $860
3. Prepare an adjusted trial balance on May 31, 2022:
Debit Credit
Cash $2,463
Supplies 1,070
Supplies Expense 1,530
Prepaid Insurance 1,440
Insurance Expense 360
Depreciation - Building 250
Depreciation - Equipment 200
Accumulated Depr-Building 250
Accumulated Depr-Equipment 200
Mortgage Interest Expense 186
Mortgage Interest Payable 186
Land 14,963
Buildings 71,200
Equipment 16,800
Accounts Payable $ 4,663
Unearned Rent Revenue 790
Mortgage Payable 37,200
Mortgage Interest Exp 186
Mortgage Interest Payable 186
Common Stock 59,963
Rent Revenue 11,510
Salaries and Wages Expense 3,860
Salaries & Wages Payable 860
Utilities Expense 800
Advertising Expense 500
$115,808 $115,808
4. Prepare an income statement for the month of May:
Rent Revenue $11,510
Expenses:
Supplies $1,530
Insurance 360
Salaries & Wages 3,860
Utilities Expense 800
Advertising Expense 500
Depreciation:
Building 250
Equipment 200
Mortgage Interest 186 (7,686)
Net Income $3,824
5. Prepare an owner’s equity statement for the month of May:
Common Stock $59,963
Retained Earnings 3,824
Total Equity $63,787
6. Prepare a balance sheet at May 31:
Assets:
Cash $2,463
Supplies 1,070
Prepaid Insurance 1,440
Land 14,963
Buildings 71,200
Equipment 16,800
Total Assets $107,936
Liabilities + Equity:
Accounts Payable $4,663
Unearned Rent Revenue 790
Mortgage Interest Payable 186
Salaries & Wages Payable 860
Accumulated Depreciation:
Building 250
Equipment 200
Mortgage Payable 37,200
Common Stock 59,963
Retained Earnings 3,824
Total Liabilities +Equity $107,936
Explanation:
a) Adjusting entries are end-of-the-period journal entries used to recognize income or expenses that occurred but are not accurately displayed in your records. They are made to comply with the accrual concept and the matching principle, which demand that expenses and income should matched to the period they were incurred, whether paid for or not.
b) The three-sided ledger accounts show the debit, credit, and balance columns. This means that it shows the balance per transaction of any particular account.
c) Mortgage interest is calculated as (6% of $37,200)/12, so as to accrue for one month only. Other expenses are calculated for one month only.
Method A assumes simple interest over final fractional periods, while Method B assumes simple discount over final fractional periods. The annual effective rate of interest is 20%. Find the ratio of the present value of a payment to be made in 1.5 years computed under method A to that computed under Method B.
Answer:
The answer is "1.1"
Explanation:
In the case of a single Interest, the principal value is determined as follows:
[tex]\ I = Prt \\\ A = P + I\\A = P(1+rt) \\\\A = amount \\P= principle\\r = rate\\t= time[/tex]
In case of discount:
[tex]D = Mrt \\P = M - D \\P = M(1-rt)\\\\Where, D= discount \\M =\ Maturity \ value \\[/tex]
Let income amount = 100, time = 1.5 years, and rate =20 %.
Formula:
A = P(1+rt)
A =P+I
by putting vale in the above formula we get the value that is = 76.92, thus method A will give 76.92 value.
If we calculate discount then the formula is:
P = M(1-rt)
M = 100 rate and time is same as above.
[tex]P = 100(1-0.2 \times 1.5) \\P = 100 \times \frac{70}{100} \\P = 70[/tex]
Thus Method B will give the value that is 70
calculating ratio value:
[tex]ratio = \frac{\ method\ A \ value} {\ method \ B \ value}\\\\\Rightarrow ratio = \frac{76.92}{70}\\\\\Rightarrow ratio = \frac{7692}{7000}\\\\\Rightarrow ratio = 1.098 \ \ \ \ or \ \ \ \ 1.[/tex]
