Answer: 2. Current liabilities are greater than the quick assets of the company.
Explanation:
The acid-test ratio is a method of checking if the company has enough quick assets ( most liquid current assets) to enable it cover its current liabilities.
It is calculated by dividing the current assets less the inventory by the current liabilities. A ratio of 0.97 therefore means that the denominator which are the current liabilities are more than the quick assets of the company.
The goal of the business firms in a market economy is to maximize:
A. Profits
B. Sales
C. Consumer utility
D. Welfare
Answer:
The answer is A.
Explanation:
The goal of all business firms is to maximize profits. No business is set up just to be making losses. Even Not-for-profit companies are not being expected to be running at loss.
Maximizing profits increase shareholders's wealth.
Maximizing consumers's utility is from the perspective of customers. A customer is seeking yo maximize its utility.
Which statements are true (for a firm without non-operating income or expenses)? EBIT _____.
a. is the same as operating income
b. is the same as net sales
c. is the same as net income
d. does not include interest payments
Answer: a. is the same as operating income
d. does not include interest payments
Explanation:
The earnings before interest and taxes(EBIT) is used to measure the profit of a firm which has to do with all the incomes and the expenses that the firm makes except the income tax and the interest expenses.
It should be noted that EBIT is not the same as the net sales as it involves operating costs. Also, EBIT is higher than the net income.
Therefore, options A and D are the right answer.
Who is most likely to benefit when the Canadian dollar depreciates against the euro? A. Foreign sellers to Canadian buyers B. Canadian buyers of foreign goods C. Canadian sellers to foreign buyers D. None of these will benefit
Answer:
A
Explanation:
When the Canadian dollar depreciates against the euro, the value of the Canadian dollar falls relative to the Euro.
For example, the exchange rate before the depreciation is 40 Canadian dollar / Euro. After the depreciation, it is 80 Canadian dollars / Euro.
Goods become more expensive for Canadian buyers of foreign goods. For example, a foreign good costs 160 Euros. Before the depreciation the good would cost (160 x 40) = 6400 Canadian dollars. After the depreciation, it would cost, 12,800 Canadian dollars.
Canadian sellers to foreign buyers don't benefit from the depreciation. Assume a local good costs 40 Canadian dollars. foreigners would pay 1 Euro for the good before depreciation. After depreciation, foreigners would pay 0.5 Euros for the good
If the nominal annual interest rate is 12% compounded quarterly, what is the effective annual interest rate?
Answer:
the effective annual interest rate is 12.55 %
Explanation:
The computation of the effective annual interest rate is shown below:
Effective annual interest rate is calculated by using the following formula
= {(1 + interest ÷ number of compounding period)^number of compounding period} - 1
= (1 + .12 ÷ 4)^4-1
= (1.03)^4 - 1
r = 1.1255 - 1
r=.1255
hence, the effective annual interest rate is 12.55 %
For each of the following parts of the definition of auditing, state which part of the precedingnarrative fits the definition:a. Informationb. Established criteriac. Accumulating and evaluating evidence d. Competent, independent persone. Reporting results
Answer:
Reporting results
Explanation:
Here reports involve various things like
1. Which of the trucks were parked as on June 30, 2011 at night
2. Figure out the ownership whether it is with the regional delivery service or not
3. Figure out the physical condition of the truck as per the guidelines prescribed
4. Analyze and evaluate the blue book for find out the fair value as per the blue book
These four things should be involved
Select the account classification that matches with the description.
Sales of products or services.
A. Assets
B. Dividends
C. Expenses
D. Liabilities
E. Revenues
F. Stockholder's Equity
Answer:
E. Revenues
Explanation:
The sale of products or services brings about revenue to the business.
The revenue according to the accrual concept is recognized when an entity has performed its obligation of delivering goods or rendering services to its customers.
Sale revenue has the expenses deducted from it in a bid to ascertain the company's profitability or the bottomline
Following is selected financial information from General Mills, Inc., for its fiscal year ended May 29, 2016 ($ millions):
Cash from financing activites includes the effects of foreign exhange rate fluctuations.
Revenue $16,563.1
Cost of goods sold $10,733.6
Cash from operating activities 2,629.8
Cash, ending year 763.7
Cash, beginning year 334.2
Total liabilities 16,405.2
Stockholders' equity 5,307.1
Cash from investing activities 93.4
Noncash assets 20,948.6
Total expenses (other than cost of goods sold) 4,092.7
Cash from financing activities* (2,293.7)
Prepare the income statement, the balance sheet, and the statement of cash flows for General Mills for the fiscal year ended May 29, 2016.
Answer:
General Mills, Inc.
1. Income Statement for the fiscal year ended May 29, 2016:
Revenue $16,563.1
Cost of goods sold $10,733.6
Gross profit $5,829.5
Total expenses $4,092.7
Net Income $1,736.8
2. General Mills, Inc. Balance Sheet for the fiscal year ended May 29, 2016:
Cash $763.7
Non-cash assets 20,948.6
Total assets $21,712.3
Total liabilities 16,405.2
Stockholders' equity 5,307.1
Total Liab. + equity $21,712.3
3. General Mills, Inc. Statement of Cash Flows for the fiscal year ended May 29, 2016:
Cash from operating activities $2,629.8
Cash from investing activities 93.4
Cash from financing activities* (2,293.7)
Net Cash Flows $429.5
Cash, beginning year 334.2
Cash, ending year $763.7
Explanation:
a) Interestly, General Mills, Inc.'s income statement shows the financial performance (profit points) of the company when revenue is compared with the cost of goods sold and the expenses. The first profit point is the gross profit, which is the difference between revenue and cost of goods sold. The second profit point is the net income, which is the difference between the gross profit and the expenses incurred for the period in running the business.
b) On the other hand, General Mills, Inc.'s balance sheet shows the financial position of the company. They show what the business owns (assets) and what it owes (liabilities) outsiders and the owners of the company (equity).
c) While, General Mills, Inc.'s statement of cash flows shows the cash flows from operating, financing, and investing activities of the company, and the net cash flows for the period, which can be reconciled to the beginning cash to obtain the ending cash balance.
The process of putting strategy into action is known as:_________a. Environmental analysis.b. Strategy formulation.c. Strategic visioning.d. Strategy implementation.
Answer:
d. Strategy implementation.
Explanation:
Strategic implementation is the process of putting the strategy into action.
After strategic planning, which is the definition of the action plans necessary for a company to achieve the defined objectives and goals, it is the phase of strategic implementation, which is the process of executing the plans defined in the planning stage.
Therefore, when implementing the strategy in an organization, it is necessary that the action plans are constantly monitored, so that the managers can have knowledge of the performance of the designed strategy, to prevent failures, correct some essential factor for the effectiveness of the action plans, monitor the internal and external environment, monitor the performance of employees, etc., in order to seek continuous improvement of the company's strategic action processes to achieve the expected objectives.
Definition of scarcity
Answer:
The state of being scarce or in short supply.
Example: A time of Scarcity.
You run a manufacturing facility that makes roller skates. Fixed monthly cost is $50,000 in mortgage, $3,000 per employee on average in salaries (you have 40 employees) and $20,000 in other expenses. The cost of raw materials is $2 per skate, and other costs per skate average to about $1. You sell the skates for $19.95 each.
How many skates must you sell to breakeven?
Define the random variable X.
Express Total Revenue, Fixed Cost, Variable Cost, Total Cost, and Profit in terms of X.
Calculate Breakeven point.
Answer and Explanation:
The computation is shown below:
Let us assume the Breakeven point be X
Now
Total revenue = $19.95.X
And,
Total cost is
= Total fixed cost + Total variable cost
= $190,000 + 3.X
Also as we know that At Breakeven point,
Total revenue = Total cost
19.95.X = $190,000 + 3.X
16.95.X = $190,000
X = $190,000 ÷ $16.95
= 11,209.43 units
Therefore the break even point is 11,209 units
What is refers to the primary market for municipal securities?
Answer:
Please find the detailed answer below.
Explanation:
Securities (e.g bonds, equities etc) are created in the primary markets. Simply put, the primary market for municipal securities is the market between municipal government and the investors. Municipal government issued securities direct from investors.
If after the primary market, investors sell the same security among themselves, the market is known as secondary market.
A real estate broker's license enables a person to handle the sale of:a. Registered mobile homesb. Business opportunitiesc. Trust deedsd. All of these
Answer:
All of these
Explanation:
A real estate broker's license enables the holder to have a wide opportunity, from an estate agency to investment. Hence, considering the options available: it is correct to conclude that: a real estate broker's license enables a person to handle the sale of Registered mobile homes, Business opportunities, and Trust deeds.
Therefore, the correct answer, in this case, is option D: All of these.
What happened to assets, earnings, dividends, and cash flows during the financial year? The Provincial and Teritorial Securities Commissions require all publidy traded companies to periodically report their financial corporation must publish an annual report that contains the balance sheet, income statement, statement of cash A publicly held flows, statement of retained earnings, and other financial information for analysls. The following table lists descriptions of the major financial statements and reports that a firm statement or report for each description. publishes. Identify the correct Statement or Report Is required by the Provincial and Territorial Securities Commissions and includes the audited document that shows the company's financial results for the past year and management's discussion about the future outlook and plans Details changes in the capital received from investors ir exchange for shares (paid-in capital), donated capital, and retained earnings Aggregates all cash inflows, which the company receives from its ongoing activities and investment sources, and all cash outflows Gives information about earnings before interest, taxes, depreciation, and amortization Provides a quantitative summary of a company's assets, liabilities, and net worth at a specific point in time Accountants focus on creating financial statements, whereas finance professionals use these statements to eva answer questions about its the following table. luate a firm and performance. Indicate which financial statement you would refer to when answering the questions in Balance Sheet Statement of Cash Flows Does the firm generate enough internal funds to support antidpated investment or does addtional outside capital need to be raised? Can the firm meet all its short-term obligations using its current assets?
Answer:
1.
Is required by the Provincial and Territorial Securities Commissions and includes the audited document that shows the company's financial results for the past year and management's discussion about the future outlook and plans - ANNUAL STATEMENT
The annual statement is a very important document that shows a company's financial results in a period as well as the future outlook and plans of the company according to management.
Details changes in the capital received from investors in exchange for shares (paid-in capital), donated capital, and retained earnings - STATEMENT OF CHANGES IN EQUITY.
The Statement of changes in equity shows the changes in capital from investors as well as donated capital and retained earnings.
Aggregates all cash inflows, which the company receives from its ongoing activities and investment sources, and all cash outflows - STATEMENT OF CASHFLOWS
A very important statement, the Statement of cashflows shows the actual amount a company has by deducting its cash outflows from inflows.
Gives information about earnings before interest, taxes, depreciation, and amortization. - INCOME STATEMENT
The Income statement is used to calculate the income for the company in a particular period. It includes expenses such as taxes, interest, depreciation and amortizaton.
Provides a quantitative summary of a company's assets, liabilities, and net worth at a specific point in time. BALANCE SHEET.
The Balance sheet is used to show the assets, liabilities and equity of a company in a given period.
2.
Does the firm generate enough internal funds to support anticipated investment or does additional outside capital need to be raised? - STATEMENT OF CASHFLOWS
As the Statement of Cash Flows shows the actual amount of money available, it would be the best to use to see if the company is generating enough internal funds.
Can the firm meet all its short-term obligations using its current assets? - BALANCE SHEET
The Balance sheet contains information on the firm's current assets as well as its current liabilities and so would be the best statement to use.
Managers who are responsible for just one organizational activity are known as ______ managers.a. specialist b. first-line c. singular d. functional e. top-level
Answer:
d. functional
Explanation:
A functional manager can be described as a managers whose responsibility is to manage an organizational unit such as a department within an organization.
A manager can be given the responsibility to manager a specific department such as marketing, engineering, IT, or public relations.
The primary role of a functional manager is to be in charge and manage resources in his department, and to also to direct the technical work of people working on a project under his functional area.
Therefore, managers who are responsible for just one organizational activity are known as functional managers. The correct option is d. functional.
The cost of debt is lower than the costs of stocks. a. True b. False
Answer:
True
Explanation:
The cost of debt is the rate of return that equates the price of the bond to the stream of future cash flows. Interest payable on debts are tax-deductible. It implies that businesses which use debt finance could use the interest paid on them as an expense to reduce the taxable profit and then pay lower tax.
On the other hand, cost of equity is more expensive than debt partly because the equity investors perceived equity to be riskier than debt. Therefore, they would require a higher return to compensate them for the higher risk. Note that return paid to investors is cost to the company.
Also, cost o equity includes such cost as issuing cost which further make equity more costly
What is tax planning, and how is it related to savings and investment planning? Tax planning involves evaluating your current and projected earnings and developing strategies that can legally_______ and/or_______ your tax liability. As it is currently written, the U.S. tax code recognizes several types of taxable income, including: Active,or ,_______income Passive income Portfolio, or ,_______income Tax-deferred and/or tax-free income Tax planning is closely related to savings and investment planning, because tax-reducing strategies often involve the use of tax-deferred or tax-free investments Tax-free investments are so called because the interest or other income paid to their owners is federal, and, perhaps, state taxes. Owners of tax-deferred investments, on the other hand, are allowed to paying taxes on any returns generated by the investment.
Answer:
defer and/or reduce
ordinary income; Passive Income Portfolio, or, Investment income
Explanation:
Tax planning is a measure to control the tax liability in a legal and effective manner, which does not lead to any misconduct and also ensures that the person in concern have to pay the least tax possible.
As per US Internal Revenue Code, ordinary income is the income which is charged to tax at ordinary rates, that is income other than the capital gains, as capital gains are chargeable at some specified rates.
Investment incomes are income earned through investments, these days to reduce the tax burden many investments which provide exemption or deduction in tax liability, because of investment in that security, or the income earned through that investment is exempt or deducted from gross total income. Therefore, investment and savings are closely related to the tax planning.
In recent years, foreign firms were reluctant to merge with or acquire American corporations.a. Trueb. False
Answer:
b. False
Explanation:
Merging or acquiring American corporations by foreign firms helps them consolidating businesses or assets with a view to increasing productivity, maintaining a competitive edge, growing market share, or controlling supply and distribution networks. It gives them a reputation at the international stage as the United States has a dominant capitalist stand and merging with it ensures a promising future in the business market.
The income statement, also known as a profit and loss (P&L) statement, provides a snapshot of a company's financial performance during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they are incurred, not necessarily when cash is received or paid. Investors and analysts use the information presented in the income statement, and the other financial statements and reports, to evaluate the company's financial performance and condition Consider the following scenario: Green Caterpillar Garden Supplies Inc.'s income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Green Caterpillar is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 70.00% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Green Caterpillar expects to pay $100,000 and $896,963 of preferred and common stock dividends, respectively.Complete the Year 2 income statement data for Green Caterpillar, then answer the questions that follow. Round each dollar value to the nearest whole dollar. Green Caterpillar Garden Supplies Inc. Income Statement for Year Ending December 31 Year 1 Year 2 (Forecasted) $15,000,000 10,500,000 600,000 600,000 $3,900,000 390,000 Net sales Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses Operating income (or EBIT) Less: Interest expense Pre-tax income (or EBT) Less: Taxes (40%) Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings $3,510,000 1,404,000 $2,106,000 100,000 $2,006,000 737,100 $1,109,037 $1,565,787 Given the results of the previous income statement calculations, complete the following statements:Given the results of the previous income statement calculations, complete the following statements: • In Year 2, if Green Caterpillar has 10,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. • If Green Caterpillar has 500,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2 • Green Caterpillar's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. • It is to say that Green Caterpillar's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,109,037 and $1,565,787, respectively. This is because of the items reported in the income statement involve payments and receipts of cash.
Answer:
The solution and the calculation is shown on the first , second and third image
Explanation:
The following information is available for Sandhill Company at December 31, 2017, regarding its investments.
Securities Cost Fair Value
2,500 shares of Myers Corporation Common Stock $36,200 $45,300
900 shares of Cole Incorporated Preferred Stock 24,300 20,800
$60,500 $66,100
Prepare the adjusting entry (if any) for 2017, assuming no balance in the Fair Value Adjustment account at January 1, 2017. Neither of Sandhill’s investments result in significant influence. Assume the securities as trading securities.
Answer:
Fair value adjustment Dr - $5,600
Unrealized holding gain Cr - $5,600
Explanation:
Date Description Debit Credit
Fair value adjustment - available for sale $5,600
Unrealized holding gain or loss-income $5,600
Working
Fair value adjustment - available for sale = $66,100 - $60,500 = $5,600
what potential benefits do connected-car technologies offer auto makers such as BMW in terms of enhancing long-term customer relationships?
Answer: The answer is given below
Explanation:
The potential benefits that connected-car technologies offer auto makers such as BMW in terms of enhancing long-term customer relationships are cloud based digital services that are customized, cars which are internet equipped that'll help in customers driving experience.
Others include social platform, online entertainment, roadside assistance, e-commerce etc
The potential benefits that connected-car technologies offer auto makers such as BMW in terms of enhancing long-term customer relationships are cloud based digital services that are customized, cars which are internet equipped that'll help in customers driving experience.
What are the term potential benefits about?
Potential benefits defined as the benefits that include the abilities have a capability to become successfully.
Connected vehicle help to drivers to navigate the roads more efficiently along with help the system operators to enhance the operations of transportation system.
Moreover, potential benefits include social platform, online entertainment, roadside assistance, e-commerce etc
Learn more about potential benefits, refer to the link:
https://brainly.com/question/13937214
What is an economy?
In general, is the U S. federal tax system progressive or regressive?
A. Regressive
B. Progressive
Answer:
Option B (Progressive) is the correct choice.
Explanation:
The federal income tax throughout the US seems to be a progressive form of taxation. The effective tax rate system places additional personal income taxation on someone with maximum salaries, as well as a lower corporate tax rate on those with a relatively low wage. The number of percentage changes at increments as tax earnings rise.Do you think most employers are serious about the development of their employees or are they only concerned with productivity?
Answer:
Productivity is the phenomena of the world economies. It is important for the development and growth.
Explanation:
There are many international and national organization that take care about their employees growth. But many of organization are there which is only think about the productivity not about their employees. The industrial organization psychology worked on this concepts. Many research has been done just because to find out about the employees condition and productivity in an organization.
It is very important for employers if they think about the mental, physical health of their employees it affects the productivity. If employees are satisfied with the environment and policy of a company then productivity will also increase side by side.
Because Mei-ling has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is the sale of fine European mixers. The owner of Generous Supply Co. has approached Mei-ling to become the exclusive distributor of these fine mixers in her state. The current cost of a mixer is approximately RM575, and Mei-ling would sell each one for RM1,150. Mei-ling comes to you for advice on how to account for these mixers.
Mei-ling asks you the following questions.
1. "Would you consider these mixers to be inventory or should they be classified as supplies or equipment?" Why?
2. "I’ve learned a little about keeping track of inventory using both the perpetual and the periodic systems of accounting for inventory. Which system do you think is better? Which one would you recommend for the type of inventory that I want to sell?"
3. "How often do I need to count inventory if I maintain it using the perpetual system? Do I need to count inventory at all?"
Answer:
1. "Would you consider these mixers to be inventory or should they be classified as supplies or equipment?" Why?
The mixers will be part of merchandise inventory since Mei-ling is purchasing them and will later resell them at a higher price and hopefully make a profit. Products classified as supplies or equipment are used by the company in their day to day activities and are not meant for resale.
2. "I’ve learned a little about keeping track of inventory using both the perpetual and the periodic systems of accounting for inventory. Which system do you think is better? Which one would you recommend for the type of inventory that I want to sell?"
The perpetual inventory system is much better than the periodic inventory system, but it is also more expensive to use. Depending on the number of mixers that are going to be sold, you can do it hand or use a computer software which would make things much easier, but you need to spend time (labor) and money to do so.
If Mei-ling is expecting to sell only a small number of mixers, then she could use a periodic inventory system which is much more simple and is only updated every certain period of time (monthly, quarterly, semiannually or annually). This is a cheaper system but it is the best alternative.
3. "How often do I need to count inventory if I maintain it using the perpetual system? Do I need to count inventory at all?"
Even if you use the perpetual inventory system, you will eventually need to physically count your inventory in order to make sure that the records have been properly made, but you could do it once or twice a year. Again it depends on the total units that she expects to have in inventory.
What sum of money now is equivalent of $8,250 two years later, if the interest is 4% per 6-month period (8% compounded semi-annually)?
Answer:
$7052.13
Explanation:
We can calculate the present value of money equivalent of $8,250 two years later by applying present value formula
DATA
Future value = $8,250
Interest rate = 4%
Number of periods = n = 2 years x 2 times a year = 4 times
Present value =?
Solution
PV = [tex]\frac{1}{1+(interest rate)^n} futurevalue[/tex]
PV = ×\[tex]\frac{1}{1+(0.04)^4} 8250[/tex]
PV = $7052.13
Codes of ethics are insufficient and do not serve their proper purpose if they are intended only to ensure that company policies are legal.
A. True
B. False
How can a business or organization benefit from using a consultant?
Explanation:
A consultant offers an organization his or her wealth of experience to the organization. For example, a consultant may
give useful advice about what investments a company should make.help to draft out strategies for growthassist in managing projects.provide cheaper services that hiring employees.Rowan and Vanessa plan to pool their money and talents to form a general partnership and start a music school. One of the first things Rowan and Vanessa should do is
Answer: B) consult an attorney and put their agreement in writing.
Explanation:
As soon as they have agreed to form a partnership, they should put this on paper to finalize it properly and give it more legal standing.
They do this by consulting an attorney who will then put the agreement to writing. This agreement will show what is expected of both parties and will be fully enforceable. It would also help in filling the requisite documents for the formation of the music school.
Boxer Industries worked on four jobs during its first year of operation: nos. 401, 402, 403, and 404. A review of job no. 403's cost record revealed direct material charges of $40,000 and total manufacturing costs of $50,000. If Boxer applies overhead at 150% of direct labor cost, the overhead applied to job no. 403 must have been:________.
A. $6,000.
B. $0.
C. $5,000.
D. $4,000.
E. $3,333
Answer:
Overhead= $6,000
Explanation:
Giving the following information:
Job 403:
Direct material= $40,000
Total manufacturing costs = $50,000
Boxer applies overhead at 150% of direct labor cost.
Total manufacturing costs= direct material + direct labor + allocated overhead
50,000= 40,000 + (direct labor + allocated overhead)
(direct labor + allocated overhead)= $10,000
We know that overhead is 50% higher than direct labor. In 100%, direct labor would de 40% and overhead 60%.
direct labor=10,000*0.4= $4,000
Overhead= 10,000*0.6= $6,000
Blue Plate Construction organized in December and recorded the following transactions during its first month of operations.
Dec. 2 Purchased materials on account for $400,000. Dec. 3 Used direct materials costing $100,000 on job no. 100.
Dec. 9 Used direct materials costing $150,000 on job no. 101. Dec. 15 Used direct materials costing $30,000 on job no. 102.
Dec. 28 Applied the following direct labor costs to jobs: job no. 100, $9,000; job no. 101, $11,000; job no. 102, $5,000.
Dec. 28 Applied manufacturing overhead to all jobs at a rate of 300% of direct labor dollars.
Dec. 29 Completed and transferred job no. 100 and job no. 101 to the finished goods warehouse.
Dec. 30 Sold job no. 100 on account for $200,000.
Dec. 31 Recorded and paid actual December manufacturing overhead costs of $78,000, cash.
Dec. 31 Closed the Manufacturing Overhead account directly to Cost of Goods Sold.
Required:
a. Prepare journal entries for each of the above transactions.
b. Compute the amount at which Cost of Goods Sold is reported in the company's income statement for the month ended December 31.
c. Determine the inventory balances reported in the company's balance sheet dated December 31.
d. Was manufacturing overhead in December overapplied, or was it underapplied?
Answer:
a. Journal entries
Dec. 2
Raw Materials $400,000 (debit)
Accounts Payable $400,000 (credit)
Dec. 3
Work In Process : job no. 100 $100,000 (debit)
Raw Materials $100,000 (credit)
Dec. 9
Work In Process : job no. 101 $150,000 (debit)
Raw Materials $150,000 (credit)
Dec. 15
Work In Process : job no. 102 $30,000 (debit)
Raw Materials $30,000 (credit)
Dec. 28
Work In Process : job no. 100 $9,000 (debit)
Work In Process : job no. 101 $11,000 (debit)
Work In Process : job no. 102 $5,000 (debit)
Salaries Payable $100,000 (credit)
Dec. 28
Work In Process : job no. 100 $27,000 (debit)
Work In Process : job no. 101 $33,000 (debit)
Work In Process : job no. 102 $15,000 (debit)
Overheads $75,000 (credit)
Dec. 29
Finished Goods : job no. 100 $136,000 (debit)
Finished Goods : job no. 101 $194,000 (debit)
Work In Process : job no. 100 $136,000 (credit)
Work In Process : job no. 101 $194,000 (credit)
Dec. 30
Accounts Receivable $200,000 (debit)
Cost of Sales : job no. 100 $136,000 (debit)
Sales Revenue $200,000 (credit)
Finished Goods : job no. 100 $136,000 (credit)
Dec. 31
Overheads $78,000 (debit)
Cash $78,000 (credit)
Dec. 31
Cost of Sales $3,000 (debit)
Overheads $3,000 (credit)
b. Cost of Goods Sold
Cost of Sales : job no. 100 $136,000
Add Under - Applied Overheads $3,000
Cost of Goods Sold $139,000
c. inventory balances
Work In Process Balance $50,000
Finished Goods Balance $194,000
Raw Materials Balance $120,000
d. Manufacturing Overheads Application
Manufacturing Overheads were under-applied by $3,000
Explanation:
Raw Materials Balance :
Raw Materials Purchase $400,000
Less Materials Used
job no. 100 ($100,000)
job no. 101 ($150,000)
job no. 102 ($30,000)
Raw Materials Balance $120,000
Work In Process Balance :
Only job no. 102 was yet to be completed
Costs of this job is as follows :
Raw Materials $30,000
Direct Labor $5,000
Overheads $15,000
Work In Process Balance $50,000
Finished Goods Balances :
Only Job 101 was completed and yet to be sold
Raw Materials $150,000
Direct Labor $11,000
Overheads $33,000
Finished Goods Balance $194,000