Explanation:
Friedman defends the position that companies have a social responsibility to act to maximize profit, in the sense that, the primary function of companies is to generate profit. The author goes against the growing opinions in society that companies must have social responsibility, that is, they need to create a positive and sensitive corporate image to please political and society interests and counter or even soften the words and actions its central purpose, which is profit generation. For him, social responsibility cannot be politicized in order to be an obligation of companies, as it limits freedom and interests arising from the business.
Suppose the United States has two utilities, Commonweath Utilities and Consolidated Electric. Both produce 20 million tons of sulfur dioxide pollution per year. However, the marginal cost of reducing a ton of pollution for is $ per ton and the marginal cost of reducing a ton of pollution for is $ per ton. The government's goal is to cut sulfur dioxide pollution in half (by 20 million tons per year). If the government issues 10 million tradable pollution permits to each utility, what will be the cost of eliminating half of the pollution to society?
Answer:
$4,000 million per year
Explanation:
Calculation for what will be the cost of eliminating half of the pollution to society
Cost of eliminating = (200 per ton x 20 million tons)
Cost of eliminating = $4,000 million per year.
Therefore the cost of eliminating half of the pollution to society will be $4,000 million per year.
please i need more it has to be 90 secs PLSSSSSS i need help i hate this class its college prep i beg you
passion is a docter has to be 90 sec pls
Answer:
what is the question?
Explanation:
These are selected 2017 transactions for Swifty Corporation: Jan. 1 Purchased a copyright for $122,750. The copyright has a useful life of 5 years and a remaining legal life of 30 years. Mar. 1 Purchased a patent with an estimated useful life of 4 years and a legal life of 26 years for $51,120. Sept. 1 Purchased a small company and recorded goodwill of $154,200. Its useful life is indefinite. Prepare all adjusting entries at December 31 to record amortization required by the events.
Answer:
Dr Amortization expense $24,550
Cr Copyright asset $24,550
Dr Amortization $10,650
Cr Patent asset $10,650
Explanation:
Preparation of all adjusting entries at December 31 to record amortization required by the events
Based on the information given the adjusting entries at December 31 to record amortization required by the events will be :
Dr Amortization expense $24,550
Cr Copyright asset $24,550
Dr Amortization $10,650
Cr Patent asset $10,650
Calculation for Annual amortization of copyrights
Annual amortization of copyrights = Cost of copyright/Useful life
Annual amortization of copyrights= $122,750/5
Annual amortization of copyrights= $24,550
Calculation for Annual amortization of patent
Annual amortization of patent = Cost of patents/Useful life
Annual amortization of patent= $51,120/4
Annual amortization of patent= $12780
Amortization of patent for 2017 = $12780 x 10/12
= $10,650
In the context of using information technologies for a competitive advantage, which statement is true of a top-line strategy? a. It focuses on generating new revenue by offering new products and services. b. It focuses on improving efficiency by reducing overall costs. c. It focuses on helping different market segments achieve technological advancement. d. It focuses on refining operations by using latest technologies.
Answer:
a. It focuses on generating new revenue by offering new products and services.
Explanation:
An information system or technology can be defined as a set of components or computer systems, which is used to collect, store, and process data, as well as dissemination of information, knowledge, and distribution of digital products. Thus, an information system or technology interacts with its environment by receiving data in its raw forms and information in a usable format.
Information technology is an integral part of human life because individuals, organizations, and institutions rely on information technologies in order to perform their duties, functions or tasks and to manage their operations effectively. For example, all organizations make use of information systems for supply chain management, process financial accounts, manage their workforce, and as a marketing channels to reach their customers or potential customers.
Additionally, an information system comprises of five (5) main components;
1. Hardware.
2. Software.
3. Database.
4. Human resources.
5. Telecommunications.
Hence, in the context of using information technologies for a competitive advantage over rivals in the industry, the statement which is true of a top-line strategy is that, it focuses on generating new revenue by offering new products and services. The top-line strategy ensures that the company continues to generate gross revenue or sales.
Why couldn't your friends change the amount spent on education and family care?
Answer: is this a real question ???
Explanation:
Cramer Company sold five-year, 9% bonds on October 1, 2021. The face amount of the bonds was $120,000, while the issue price was $126,000. Interest is payable on April 1 of each year. The fiscal year of Cramer Company ends on December 31. How much interest expense will Cramer Company report in its December 31, 2021, income statement (assume straight-line amortization)?
a. $2,000.
b. $1,900.
c. $1,778.
d. $2,040.
Answer:
mmmmmmmm
Explanation:
At December 31, Year 1, Kale Co. had the following balances in the accounts it maintains at First State Bank:
Checking account #101 $175,000
Checking account #201 (10,000)
Money market account 25,000
90-day certificate of deposit, due 2/28/Y2 50,000
180-day certificate of deposit, due 3/15/Y2 80,000
Kale classifies investments with original maturities of three months or less as cash equivalents. In its December 31, Year 1, balance sheet, what amount should Kale report as cash and cash equivalents?
Answer:
$240,000
Explanation:
The computation of the amount of cash and cash equivalent is as follows;
Amount of cash and cash equivalents is
= Money market account + 90-day certificate of deposit + Checking account for 101 - Checking account for
= $25,000 + $50,000 + ($175,000 - $10,000)
= $25,000 + $50,000 + $165,000
= $240,000
What term means the unused option when deciding how to use one's
resources.
Answer:
Opportunity cost
a debit entry in the cash account and a corresponding credit entry in David Levin's account are made for the transaction.....
Answer:
receipts of cash from David Levin's
Explanation:
18 month rent was paid at year end how will this effect the balance sheet
Answer:
Explanation:
The correct answer to your questions is letter A. Assets will be decreased.
Suppose a company has a contract to construct a building for a total sales price of $60 million. The building will take an estimated three years to complete, with a total estimated cost of $50 million. If the company incurs costs of $20 million in Year 2, how much revenue and profit should be recognized in Year 2 if the percentage of completion method is used
Answer:
$24 million
Explanation:
During year 2, the percentage of completion = $20 million / $50 million = 40%.
Since the building advanced 40% during that year, then the company must recognize 40% of total contract price as revenue for this year = 40% x $60 million = $24 million.
The percentage of completion method is not cumulative, it is calculated on a year to year basis.
Longmire & Sons made sales on credit to Alderman Sports totaling $500,000 on April 18. The cost of the goods sold is $400,000. Longmire estimates 3% of its sales to Alderman may be returned. On May 22, $9,000 worth of goods (with a cost of $7,200) are returned by Alderman. Assume Longmire uses a perpetual inventory system.
Required:
Prepare the related journal entries for Longmire & Sons.
Answer:
April 18
Dr Account receivable 500,000
Cr Cash 500,000
April 18
Dr Cost of goods sold 400,000
Cr Merchandize inventory 400,000
May 22
Dr Sales return and allowance 9,000
Cr Account receivable 9,000
May 22
Dr Merchandize inventory 7,200
Cr Cost of goods sold 7,200
Explanation:
Preparation of the related journal entries for Longmire & Sons.
Based on the information given the related journal entries for Longmire & Sons will be :
April 18
Dr Account receivable 500,000
Cr Cash 500,000
(Being to record credit sales)
April 18
Dr Cost of goods sold 400,000
Cr Merchandize inventory 400,000
(Being to Record cost of goods sold)
May 22
Dr Sales return and allowance 9,000
Cr Account receivable 9,000
(Being to record goods return)
May 22
Dr Merchandize inventory 7,200
Cr Cost of goods sold 7,200
(Being to Record cost of goods return)
Mortensen Industries, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The following selected information was taken from the company's accounting records: Total equivalent units of materials: 8,000 Total equivalent units of conversion: 7,240 Units started and completed during the period: 6,100 On the basis of this information, the ending work-in-process inventory's stage of completion is:
Answer:
60%
Explanation:
Calculation for what the ending work-in-process inventory's stage of completion is:
First step is to calculate the Total materials
Total equivalent units of materials + Units started and completed during the period = Total materials or 6,100 + x = 8,000; x = 1,900 (8,100-6,100)
Second step is to calculate Partial units with conversion costs in ending inventory
Using this formula
Partial units with conversion costs in ending inventory= Equivalent units of conversion –
Units started and completed during the period
Let plug in the formula
Partial units with conversion costs in ending inventory= 7,240 – 6,100
Partial units with conversion costs in ending inventory = 1,140 units
Now let calculate the ending work-in-process inventory's stage of completion
Ending work-in-process inventory's stage of completion= 1,140 ÷1,900
Ending work-in-process inventory's stage of completion=0.6*100
Ending work-in-process inventory's stage of completion= 60%
Therefore the ending work-in-process inventory's stage of completion is:60%
A stress test in finical marketing means:_____.
A. Aims to test the behavior of historical returns and their fluctuations during all sorts of potential financial crises.
B. Does not look at historical returns, and looks at all the details of the portfolios and their vulnerabilities during all sorts of potential financial crises.
C. Tries to incorporate all potential economic and financial crises, such as recessions, appreciation and depreciation of currency, liquidity crisis, etc.
D. Tries to incorporate all the interconnections between financial institutions.
Answer:
C.
Explanation:
Stress tests are carried out to determine how financial systems would react in periods of extreme stress eg. financial or economic crisis.
Stress situations are simulated and the reaction of the financial system to the stress is measured. Based on the reactions of the financial system, steps are taken to further improve or strengthen the financial system.
The scenarios used in a stress test can be based on historical events (events that have already occurred) or hypothetical events.
Emilio’s accountant told him that if he continues to pay $50 a month on his credit card, it will take him 42 years to pay off his current balance (assuming the interest rate doesn’t change and assuming he doesn’t charge anything else on that card). His credit card interest rate is 18.99%. What is his balance?
Answer:
$3,158.40
Explanation:
The current balance on his credit card is the present value of $50 payable per month over 42-year period as shown below:
PV=monthly payment*(1-(1+r)^-n/r
PV=the unknown
montly paymet=$50
r=monthly interest rate= 18.99%/12=0.015825
n=number of monthly payments=42*12=504
PV=$50*(1-(1+0.015825)^-504/0.015825
PV=$50*(1-(1.015825)^-504/0.015825
PV=$50*(1-0.000365827)/0.015825
PV=$50*0.999634173/0.015825
PV=$3,158.40
Based on this model, households earn income when _______purchase______ in factors markets.
Suppose Eileen earns $600 per week working as a corporate attorney for Rowan and Martin Associates. She uses $8 to buy a box of aspirin at Pillmart Pharmacy. Pillmart Pharmacy pays Clancy $350 per week to work the cash register. Clancy uses $175 to purchase legal service from Rowan and Martin Associates Identify whether each of the following events in this scenario occurs in factor market or the product market.
Event Factor Market Product Market
Clancy earns $350 per week working for Pillmart Pharmacy.
Eileen earns $600 per week working for Rowan and Martin Associates
Clancy spends $175 to purchase legal service from Rowan and Martin Associates.
Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs.
a. The $350 per week Clancy earns working for Pillmart Pharmacy
b. The $175 Clancy spends to purchase legal service from Rowan and Martin Associates
c. The aspirin Eileen receives
d. Eileen's labor
Answer:
Based on this model, households earn income when FIRMS purchase SERVICES in factors markets.
Identify whether each of the following events in this scenario occurs in factor market or the product market.
Event Factor Market Product Market
Clancy earns $350 per week working for Pillmart Pharmacy. FACTOR MARKET
Eileen earns $600 per week working for Rowan and Martin Associates FACTOR MARKET
Clancy spends $175 to purchase legal service from Rowan and Martin Associates. PRODUCT MARKET
Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs.
b. The $175 Clancy spends to purchase legal service from Rowan and Martin Associates PRODUCT MARKET, HOUSEHOLD PURCHASES PRODCUTS
d. Eileen's labor FACTOR MARKET, HOUSEHOLDS SELL SERVICES TO FIRMS
Reese Inc., a provider of consulting services, was founded on October 1, 2022. At the end of the first month of operations, the company decided to prepare an income statement, retained earnings statement, and balance sheet using the following information. Prepare an income statement, retained earnings statement, and balance sheet. Accounts payable $ 3,300 Supplies $ 2,460 Interest expense 410 Supplies expense 380 Equipment (net) 48,200 Depreciation expense 270 Salaries and wages expense 2,500 Service revenue 20,920 Bonds payable 21,500 Salaries and wages payable 445 Unearned service revenue 4,065 Common stock 9,100 Accounts receivable 1,300 Interest payable 140 Cash 3,950 Instructions Using the information, prepare an income statement and retained earnings statement for the month of October 2022 and a balance sheet as of October 31, 2022. End. retained earnings $17,360
Answer and Explanation:
The preparation of the income statement, retained earnings, and the balance sheet is presented below:
Income statement
Service revenue $20,920
Less: expenses
Salaries & wages expense -$2,500
Interest expense -$410
Depreciation expense -$270
Supplies expense -$380
Total expense -$3,560
Net income $17,360
Retained earnings
Opening retained earnings balance $0
Add: net income $17,360
Ending retained earnings balance $17,360
Balance sheet
Assets
cash $3,950
Accounts receivable $1,300
Supplies $2,460
Equipment ,net $48,200
total assets $55,910
Liabilities and Stockholders Equity
liabilities:
Accounts payable $3,300
unearned service revenue $4,065
Salaries and wages payable $445
interest payable $140
Bonds payable $21,500
total liabilities $29,450
Stockholders equity:
Common stock $9,100
Retained earnings $17,360
total stockholders equity $26,460
total liabilities & stockholders equity $55,910
According to your analytics reading, ________________________ shows you how many pages on your site that have received a visit from organic search results. This is a good way to see which pages search engines are picking up. This helps you understand if your SEO code is working, and if your content is robust enough for search engines to understand.
Answer:
Indexed pages
Explanation:
Search engine optimisation is the way by which websites are improved so that search engines are able to rank their content higher in search results.
Ranking is done by how relevant the website content is to the search query inputted by a user.
Search engines are constantly searching through websites and indexing web pages that meet its requirements for relevant content. This makes up indexed pages from websites.
Organic search are queries inputted by users and not influenced by payed advertisements. They lead to indexing of pages.
This is a good measurement of how effective optimisation of websites is.
Which challenge leads to development of incorrect features and functionalities in IS?
A.
end user resistance
B.
quality issues
C.
lack of documentation
D.
project completion constraints
Answer:D
Explanation:
Several years ago, a parent company acquired all of the outstanding common stock of its subsidiary for a purchase price of $400,000. On the acquisition date, this purchase price was $100,000 more than the subsidiary's book value of Stockholders' Equity. The AAP was entirely attributable to Goodwill. Since the date of acquisition, the subsidiary has reported cumulative net income of $400,000 and paid $50,000 of dividends to its parent company. Compute the balance of the Equity Investment account on the parent's pre-consolidation balance sheet assuming that the Goodwill asset has not declined in value subsequent to the date of acquisition.
Answer:
$750,000
Explanation:
Computation of the balance of the Equity Investment account on the parent's pre-consolidation balance sheet
EQUITY INVESTMENT ACCOUNT
Purchase price $400,000
Add Net income $400,000
Less Dividends ( $50,000 )
Balance of equity $750,000
($400,000+$400,000-$50,000)
Therefore the balance of the Equity Investment account on the parent's pre-consolidation balance sheet assuming that the Goodwill asset has not declined in value subsequent to the date of acquisition will be $750,000
Which of the following statements is true of globalization? Group of answer choices It has curbed the growth of the middle class in developing countries. It expands economic freedom and increases the living standards of people. It leads to a monopoly of domestic producers. It increases prices and decreases product and service quality.
Answer:
It expands economic freedom and increases the living standards of people.
Explanation:
Globalization is a phenomenon that can be defined as the cultural, social and economic interaction between the countries of the world, which was motivated by the technological innovations that occurred, such as new means of transport and the internet.
The distances between countries have become shorter, the ease of transportation and current instant communication enable greater interaction including business, which contributes to the expansion of economic freedom, as there is greater industrialization, greater import and export favored by economic interactions between the countries, which contribute to greater development, greater possibility of doing business in places with lower costs and economic advantages. Such factors favored by globalization contribute to economic growth that positively impacts people's standard of living, creating more jobs and increasing purchasing power.
We can see here that the statement that is true of globalization is: "It expands economic freedom and increases the living standards of people"
What is globalization?Globalization refers to the increasing interconnectedness and integration of economies, societies, and cultures around the world. It is driven by advancements in technology, communication, transportation, and trade, which have enabled the exchange of goods, services, information, and ideas across national borders.
Globalization has led to the creation of a global marketplace, where businesses, governments, and individuals operate on an international scale. It encompasses various aspects such as trade, investment, migration, cultural exchange, and the spread of technology. Globalization has both positive and negative impacts on economies, societies, and individuals, influencing areas such as economic growth, employment, income inequality, cultural diversity, and environmental sustainability.
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You have purchased one call option expiring in one year with a strike price of $40. The current price of the underlying is $30, the interest rate is zero, and the premium for the call option is $2.63.
1) Draw the payoff and P&L diagrams for the call option at expiration.
2) What is the P&L on the option at expiration if the underlying is $57.50 (i.e. S1 = 57.5)?
Solution :
2). Calculation of the P & L on the option at expiration if underlying price is $ 57. 50
As the underlying price is more than the exercise price, the option is exercised.
The initial cash flow = - $ 2.63
Cash flow at the expiration = $ 57.50 - $ 40
= $ 17.50
Therefore, profit = $ 17.50 - $ 2.63
= $ 15.07
1). The strike price or the exercise price = $ 40
Premium for call option = $ 2.63
When Patey Pontoons issued 6% bonds on January 1, 2021, with a face amount of $600,000, the market yield for bonds of similar risk and maturity was 7%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2021. 2. Prepare the journal entry to record their issuance by Patey on
Answer:
The price of the bonds $579,378.13
Journal entry:
Dr cash $579,378.13
Dr discount on bonds payable $20,621.87
Cr bonds payable $600,000.00
Explanation:
Using a financial calculator, we determine the bond price by using the following inputs:
N=8(number of semiannual coupons in 4 years=4*2=8)
PMT=18000 (semiannual coupon=face value*coupon rate*6/12= $600,000*6%*6/12=$18000)
I/Y=3.5(semiannual yield=7%*6/12=3.5%)
FV=600000( the face value is $600,000)
CPT PV=$579,378.13
Bond discount=face value-bond price
Bond discount=$600,000-$579,378.13
Bond discount=$20,621.87
The double entries are to debit cash and discount on bonds payable with $579,378.13 and $20,621.87 respectively while bonds payable is credited with the face value of $600,0000
Use two correctly labeled side-by-side graphs of the loanable funds market in the United States and China to show how a higher interest rate in the United States will lead to capital flows between the two countries. On your graphs, be sure to label the equilibrium interest rate in each country in the absence of international cap- ital flows, the international equilibrium interest rate, and the size of the capital inflows and outflows.
Answer:
Figure is given below.
Explanation:
The graph of United states and china is as follows :
Equilibrium is a condition in which market demand and supply or market forces are balanced, resulting in steady prices. Demand and supply balance each other out, resulting in a condition of equilibrium.
The international interest rate of equilibrium is set at 4%. The chart also shows capital inflows and outflows, as well as the United States and China's off-balance interest rates.
The image is attached below to show the equilibrium graphs.
For more information regarding US and China equilibrium, refer to the link:
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The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $62,500. According to an independent appraisal, the land currently is worth $150,000. Tinsley paid $25,000 in cash to complete the transaction. Required: 1. What is the fair value of the new parcel of land received by Tinsley assuming the exchange has commercial substance
Answer:
$175,000
Explanation:
When an exchange transaction has commercial substance, the accounting standard IAS 16 requires that the cost price of the item acquired be at fair Value of the asset given up.
Fair Value of Asset given up is $150,000.
However Tinsley has also paid a trade -in allowance for the new parcel of land of $25,000.
Therefore, the fair value of the new parcel of land received by Tinsley assuming the exchange has commercial substance is $175,000 ($150,000 + $25,000)
Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.
Statement Consumer Surplus Producer Surplus Neither
Even though I was willing to pay up to $49 for a jersey sweater, I bought a jersey sweater for only $39.
I sold a used laptop for $106, even though I was willing to go as low as $100 in order to sell it.
I sold a watch for $52 on eBay last week. This week, someone offered me $110 for
Answer:
Consumer surplus
Producer surplus
Neither
Explanation:
Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.
Consumer surplus = willingness to pay – price of the good
I was willing to pay $49 for the sweater but paid $39, thus the consumer surplus is $10
Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product
Producer surplus = price – least price the seller is willing to accept
The least amount i was willing to sell my laptop is $100 but i was paid $106 for it. The producer surplus is $6
The third statement is not about consumer or producer surplus. There is no information on the least amount the seller was willing to accept or the highest amount the consumer was willing to sell
Determine the amount of the standard deduction for each of the following taxpayers for tax year 2020: Christina, who is single. Adrian and Carol, who are filing a joint return. Their son is blind. Peter and Elizabeth, who are married and file separate tax returns. Elizabeth will itemize her deductions. Karen, who earned $1,100 working a part-time job. She can be claimed as a dependent by her parents. Rodolfo, who is over 65 and is single. Bernard, who is a nonresident alien with U.S. income. Manuel, who is 70, and Esther, who is 63 and blind, will file a joint return. Herman, who is 75 and a qualifying widower with a dependent child.
Answer:
Christina, who is single. STANDARD DEDUCTION FOR SINGLE FILER $12,400
Adrian and Carol, who are filing a joint return. Their son is blind. STANDARD DEDUCTION FOR MARRIED FILING JOINTLY $24,800
Peter and Elizabeth, who are married and file separate tax returns. Elizabeth will itemize her deductions. PETER'S STANDARD DEDUCTION IS $12,400 (MARRIED FILING SEPARATELY), WHILE ELIZABETH DOES GET A STANDARD DEDUCTION (SHE WILL ITEMIZE)
Karen, who earned $1,100 working a part-time job. She can be claimed as a dependent by her parents. STANDARD $1,100 DEDUCTION FOR A DEPENDENT.
Rodolfo, who is over 65 and is single. STANDARD DEDUCTION OF $14,050 FOR BEING SINGLE AND OVER 65.
Bernard, who is a nonresident alien with U.S. income.
NO STANDARD DEDUCTION
Manuel, who is 70, and Esther, who is 63 and blind, will file a joint return.
STANDARD DEDUCTION FOR MARRIED FILING JOINTLY $27,400, ONE BEING OVER 65 AND THE OTHER ONE BEING BLIND
Herman, who is 75 and a qualifying widower with a dependent child.
STANDARD DEDUCTION FOR MARRIED FILING JOINTLY $26,100 (QUALIFYING WIDOWER) AND ONE BEING OVER 65
Suds and Duds Laundry washed and pressed the following number of dress shirts per​ week:
Week Work Crew Total Hours Shirts
1 Sud and Dud 24 168
2 Sud and Jud 46 130​
3 Sud, Dud, and Jud 62 162
​4 Sud, Dud, and Jud 51 125
5 Dud and Jud 45 131
Required:
For the given​ information, the labor productivity per hour for each week is ​(enter your responses rounded to two decimal ​places)​:________
Answer and Explanation:
The computation of the labor productivity per hour for each week is shown below:
As we know that
Labor productivity = Total shirts ÷ Total hours
For week 1
= 168 ÷ 24
= 7 shirts per hour
For Week 2
= 130 ÷ 46
= 2.83 shirts per hour
For Week 3
= 162 ÷ 62
= 2.61 shirts per hour
For Week 4
= 125 ÷ 51
= 2.45 shirts per hour
For Week 5
= 131 ÷ 45
= 2.91 shirts per hour
Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows:
Cash collected from customers, $300,000
Cash paid for rent, $32,000
Cash paid to employees for services rendered during the year, $112,000
Cash paid for utilities, $42,000
In addition, you determine that customers owed the company $52,000 at the end of the year and no bad debts were anticipated. Also, the company owed the gas and electric company $1,200 at year-end, and the rent payment was for a two-year period.
Calculate accrual net income for the year.
Answer:
Harman-Kardon Consulting Company
Calculating the Accrual Net Income:
= $164,800
Explanation:
a) Data and Calculations:
Sales Revenue:
Cash collected from customers = $300,000
Accounts receivable at year end 52,000
Total Sales Revenue = $352,000
Utilities Expense:
Cash paid for utilities = $42,000
Utilities payable 1,200
Total utilities expense $43,200
Accrual net income:
Sales revenue $352,000
Expenses:
Rent 32,000
Salaries 112,000
Utilities 43,200 (187,200)
Net income $164,800
b) Accrual net income is determined on the accrual basis of accounting. This basis takes into account all accrued expenses and revenue, all prepaid expenses and revenue received in advance, and provides for depreciation expenses, unlike the cash basis of accounting.
During Year 3, Rex Co. introduced a new product carrying a 2-year assurance-type warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for year ended December 31, Year 3 and Year 4, are as follows:
Year Sales Actual Warranty Expenditures
2008 $250,000 $2,250
2009 250,000 7,500
Total $500,000 $9,750
What amount should Gum report as estimated warranty liability on its December 31, 2009 balance sheet?
Answer:
the amount that should reported as the estimated liability is $20,250
Explanation:
The computation of the amount that should reported as the estimated liability is as follows:
= Total sales × total percentage - total actual warranty expenditure
= $500,000 × 6% - $9,750
= $30,000 - $9,750
= $20,250
Hence, the amount that should reported as the estimated liability is $20,250