Ataxia Fitness Center is considering an investment in some additional weight training equipment. The equipment has an estimated useful life of 4 years with no salvage value at the end of the 4 years. Ataxia internal rate of return on this equipment is 6%. Ataxia discount rate is also 6%. The payback period on this equipment is closest to (Ignore income taxes.):

Answers

Answer 1

Answer: 3.47 years

Explanation:

Payback Period on an investment can be calculated as:

= Cost of investment / Net annual cash inflow

The internal rate of return is the rate that equates the Cost of investment to the annual net cash inflow. This means that if you were to solve for the IRR factor, the formula would be:

= Cost of investment /Net annual cash inflow

Notice how the formulas are the same.

The factor for IRR is therefore the Payback period.

Using your Present value of an Annuity Factor table therefore, find the Factor for the IRR rate of 6% and 4 years.

= 3.4651

= 3.47 years

Ataxia Fitness Center Is Considering An Investment In Some Additional Weight Training Equipment. The

Related Questions

Indicate which activities of Stockton Corporation violated the rights of a stockholder who owned one share of common stock.

a. Paid the stockholder a smaller dividend per share than another common stockholder.
b. Rejected the stockholder's request to be put in charge of its retail store.
c. Rejected the stockholder's sale of stock on an organized exchange.
d. Rejected the stockholder's request to vote via proxy because she was home sick.
e. In liquidation, paid the common shareholder after preferred stockholders were already paid.

Answers

Answer:

a

c

d

Explanation:

A shareholder is a person that buys stocks of a publicly traded company. they are referred to as owners and are entitled to dividends. Dividends are a proportion of income

All common shareholders earn the same amount of dividends

prefferred shareholders are given higher preference that common shareholders

To arrive at an accurate balance on a bank reconciliation statement, an error made by the bank in which the bank recorded the collection of a note and interest on behalf of another firm to the balance of the company's bank account should be

Answers

Answer:

Hi how are you doing today Jasmine

Alan Krueger conducted a survey of fans at the 2001 Super Bowl who purchased tickets to the game for​ $325 or​ $400. Krueger found that​ (a) 94 percent of those surveyed would not have paid​ $3,000 for their​ tickets, and​ (b) 92 percent of those surveyed would not have sold their tickets for​ $3,000. These results are an example of A. the failure to ignore sunk costs. B. rational consumer behavior. C. the endowment effect. D. the fallacy of composition.

Answers

Answer:

C. the endowment effect

On January 1, Year 1 Residence Company issued bonds with a $50,000 face value. The bonds were issued at 96 resulting in a 4% discount. They had a 20 year term and a stated rate of interest of 7%. Assuming a straight-line amortization of the discount, the amount of interest expense recognized on the December 31, Year 1 income statement is

Answers

Answer:

$3,600

Explanation:

According to the scenario, computation of the given data are as follows,

Bonds Face value = $50,000

Discount = 4%

Time period = 20 years

Interest rate = 7%

Premium = $50000 - ( $50,000 × 96%) = $2,000

So, we can calculate interest expense by using following formula,

Interest expense = ($50,000 × 7%) + ($2,000 ÷ 20)

= $3,600

Jahar is very friendly and loves interacting with customers. He has a lot of knowledge about loans and the risks associated with them. In which Finance career does Jahar work?

Business Finance Management

Financial Investment Planning

Insurance Services

Banking and Related Services

Answers

Answer:

banking and related services.

Banking and related services, loans are very commonly associated with banks.

You are 25 years old and are considering full-time study for an MBA degree. Tuition and other direct costs will be $60,000 per year for two years. In addition, you will have to give up your current job that has a salary of $50,000 per year. Assume tuition is paid and salary received at the end of each year. By how much does your salary have to increase (in real terms) as a result of getting your MBA degree to justify the investment? Assume a real interest rate of 2% per year, ignore taxes, assume that the salaries for both jobs increase at the rate of inflation (i.e. they stay constant in real terms), and that you retire at 65. Note: the $1 for T periods annuity formula is (1/r)*[1-1/(1+r)^T]. g

Answers

Answer:

$8,403.73

Explanation:

The job will be started at the age of 27 ( 25 years + 2 years ) and retirement will be at the age of 65.

Hence the employment years are 38 years ( 65- 27 ).

Cost of MBA program = Direct cost + Opportunity cost =  $60,000 + $50,000 = $110,000

At the age of 27, the total cost of the program will be

Total Cost of MBA program = Cost of program in first year + Cost of program in last year = $110,000 +  ( $110,000 x ( 1 + 2% ) ) = $110,000 + $112,200 = $222,200

Use the following formula to calculate teh required salary

Calculate the annuity factor

Annuity factor = (1/r)*[1-1/(1+r)^T] = (1/2%)*[1-1/(1+2%)^38] = 26.440640602064

Now use the following formula to calculate the required salary

Required salary = Total cost of MBA program / Annuity factor for 38 years at 2% = $222,200 / 26.440640602064 = $8,403.73

There is an investment with the discount rate of 6 %. What should be the present value of the investment if we want to get a net cash flow of $17500;
a) After 1 year
b) After 2 years

Answers

Answer:

a. $16,509.434

b. $15,574.94

Explanation:

The computation of the present value in each case is as followS:

As we know that

Present Value = Future Value ÷ (1+ rate of interest)^number of years

a. AFter one year

= $17,500 ÷ (1 + 0.06)^1

= $16,509.434

b. After 2 years

= $17,500 ÷ (1 + 0.06)^2

= $17,500 ÷ 1.1236

= $15,574.94

Hence, the present value after one year and 2 years is $16,509.434 and $15,574.94 respectively

In the last example, we determined that Delta has a DTA of $35,000 related to the $100,000 NOL in 2015. In 2016, it decides to apply (use up) the DTA (carryforward). The company has book income of $200,000. No book/tax differences. So, Delta reports taxable income of $200,000 before considering the effect of its NOL. How much is I.T. payable for 2016

Answers

Answer:

The I.T. payable for 2016 is $35,000

Explanation:

Use the following formula to calculate the IT payable for 2016

IT payable = Tax on Income - DTA balance

Where

Tax on Income = Income x Tax rate = $200,000 x 35% = $70,000

DTA balance = $35,000

Placing values in the formula

IT payable = $70,000 - $35,000

IT payable = $35,000

Which of the following is not one of the drivers of supply chain performance? A. facilities B. procedures C. information D. inventory

Answers

B. Procedures is not one of the drivers of supply chain performance.

The four main drivers of supply chain performance are facilities, inventory, information, and transportation. These drivers help to determine how responsive and efficient the supply chain is.

Good facilities or locations ensure that the goods produced are in good condition till they are requested by consumers. The quality of the goods is also preserved. Efficient transportation ensures that goods get to the customers on time. Inventory which involves stock-taking helps salespeople to know what goods are available and readily provide customers with the needed information and stock. Information is also an essential factor. Knowledge of factors affecting pricing, push versus pull, forecasting, etc., helps decision-makers to know what is needed to improve the quality of goods and their delivery.

Conclusively, Procedures are not one of the drivers of supply chain performance.

Learn more about supply chain performance here:

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Chronic Pain Clinic has estimated the following cash flows associated with a new project. The project cost of capital (discount rate) is 10 percent. Year Expected Net Cash Flow 0 ($800,000) 1 400,000 2 400,000 3 400,000 What is the project’s IRR? A. 18.5 percent B. 19.9 percent C. 20.4 percent D. 21.8 percent E. 23.4 percent

Answers

Answer:

E. 23.4 percent

Explanation:

The computation of the internal rate of return is shown below

Given that

The project cost of capital is 10%

And, the year and net cash flow is

Year             Expected Net Cash Flow

0                      ($800,000)

1                        400,000

2                        400,000

3                         400,000

Now we apply the following formula

= IRR()

So the internal rate of return is 23.38% i.e. 23.4%

Concord uses the periodic inventory system. For the current month, the beginning inventory consisted of 7400 units that cost $10.00 each. During the month, the company made two purchases: 3000 units at $11.00 each and 11900 units at $11.50 each. Concord also sold 12800 units during the month. Using the FIFO method, what is the ending inventory

Answers

Answer:

$109,250

Explanation:

FIFO assumes that the units to arrive first, will be sold first. Therefore, inventory valuation is based on later or recent prices.

Step 1 : units in ending inventory

Ending Inventory =  units available for sale - units sold

                             =  9,500

Step 2 : inventory value

Ending Inventory = 9,500 x $11.50 = $109,250

The manufacturer wishes to set up a control chart at the final inspection station for a gas water heater. Defects in workmanship and visual quality features are checked in this inspection. For the past 22 working days, 176 wate rheaters were inspected and a total of 924 nonconformities were reported. a) What type of control chart would you reccommend here

Answers

Answer:

I will recommend a c chart

Explanation:

From the question, we have:

[tex]n= 22\ working\ days[/tex]

[tex]Inspection = 176[/tex]

[tex]Noncomformities = 924[/tex]

First, it should be noted that a chart is used for a count datatype (in other words, numerical values) and they are usually discrete (i.e. whole numbers).

Notice that all the given data are whole digits.

Also, the c chart is to be used when the number of noncomformities are known because through the c chart shows the process of the noncomformities over specific time.

what is the cost driver for rent expense? ​

Answers

ahhhhh please help me thanks

Jonah tells his friend Derek that he would like to go parasailing. Derek is very enthusiastic and suggests that they try an outfit called Wind Beneath My Wings because he has heard good things about it. Derek offers to arrange everything. He makes a reservation, puts the $600 fee on his credit card, and picks Jonah up to drive him to the Wings location. What a friend! But the day does not turn out as Jonah had hoped. While he is soaring up in the air over the Pacific Ocean, his sail springs a leak, he goes plummeting into the sea and breaks both legs. During his recuperation in the hospital, he learns that Wings is unlicensed. He also sees an ad for Wings offering parasailing for only $350. Derek is listed in the ad as one of the company's owners.

Required:
a. Does an agency relationship exist between Derek and Jonah?
b. Discuss what duties the agent had to the principal in the above example. Did the agent fulfill his duties? Why or Why not?

Answers

Answer:

- Derek is an agent of Jonah

- Derek failed in his fiduciary duties to his principal

Explanation:

An a agent is someone that is appointed by a principal to take care of their interests. The agent's loyalty is to only his principal and he should not manipulate the relationship for personal gain.

In the given scenario Jonah appointed Derek to arrange for parasailing activity. So he is an agent to Jonah in this respect.

However Derek chooses an outfit called Wind Beneath My Wings where he is an owner, he put aside $600 instead of $350 for the reservation, and the company is unlicensed.

All these are violations of Derek's fiduciary duty. He put Jonah at risk for his own personal gain.

Blue Skies Inc. is a retail gardening company that is piloting a new strategic initiative aimed at increasing gross profit. Currently, the company’s gross profit is 25% of sales, and its target gross profit percentage is 30%. The company’s current monthly sales revenue is $480,000.

The new initiative being piloted is to produce goods in-house instead of buying them from wholesale suppliers. Its in-house production process has two procedures. The makeup of the costs of production for Procedure 1 is 40% direct labor, 45% direct materials, and 15% overhead. The makeup of the costs of production for Procedure 2 is 50% direct labor, 25% direct materials, and 25% overhead. Assume that Procedure 1 costs twice as much as Procedure 2.

Required:
Determine what the cost of labor, materials, and overhead for both Procedures 1 and 2 would need to be for the company to meet its target gross profit.

1. Cost makeup of Procedure 1:

Direct Labor
Direct Materials
Overhead
Total

2. Cost makeup of Procedure 2:

Direct Labor
Direct Materials
Overhead
Total

Answers

Answer:

Cost of Procedure 1: $268,800

Cost  of Procedure 2: $134,400

Explanation:

Sales  $480,000.

Gross Profit 25% of $480,000.= $ 120,000

Cost of Goods Sold = 480,000-120,000= $ 360,000

Procedure 1 costs twice as much as Procedure 2

Process 1 costs $ 240,000  Process 2 costs $ 120,000

To get a gross profit of 30% the sales would increase by

0.25          480,000

0.3                 x

x= 480,000*0.3/0.25= $576,000

Sales  $576,000.

Gross Profit 30% of $576,000.= $ 172,800

Cost of Goods Sold = 576,000-172,800= $ 403,200

Procedure 1 costs twice as much as Procedure 2

Process 1 costs $ 268,800  Process 2 costs $ 134,400

Procedure 1

1. Cost makeup of Procedure 1:

45% direct materials, = 45% of $ 268,800 = $ 120,960

40% direct labor, = 40% of $ 268,800 = $ 107,520

15% overhead.= 15% of $ 268,800 = $ 40,320                  

Total                                                      $268,800              

Procedure 2

2. Cost makeup of Procedure 2

25% direct materials,=25% of $ 134,400 = $ 33,600

50% direct labor,= 50% of $ 134,400 = $ 67,200  

25% overhead.=25% of $ 134,400 = $ 33,600              

Total                                                       134,400

1. Cost makeup of Procedure 1:

Direct materials, $ 120,960

Direct labor,   $ 107,520

Overhead. $ 40,320                  

Total        $268,800              

Procedure 2

2. Cost makeup of Procedure 2

Direct materials $ 33,600

Direct labor, $ 67,200  

Overhead. $ 33,600        

Total         134,400            

wo firms, A and B, each currently emit 100 tons of chemicals into the air. The government has decided to reduce the pollution and from now on require a pollution permit for each ton of pollution emitted into the air. The government gives each firm 50 pollution permits, which it can either use of sell to the other firm. It costs Firm A $200 for each ton of pollution that it eliminates before it is emitted into the air, and it cots Firm B $100 for each ton of pollution that it eliminates before it is emitted into the air. If the two firms have the same bargaining power, what would be the gains from trade for Firm B

Answers

Answer:

Firm A will buy all of the firm B's pollution permits. Each one will cost between $100 and $200.

Explanation:

The firm B will gain from the trade of pollution permits. Firm A will need higher pollution permits since it emits 100 tons of chemicals into air and the cost for eliminating each ton is $200. This cost is higher than the cost to Firm B which is $100 only. Firm A will buy all the pollution permits from Firm B and there will advantage for the Firm B to gain from the trade.

If a bank has $500 million of checkable deposits, a required reserve ratio of 15%, and it holds $126 million reserves, then the maximum deposit outflow it can sustain without running into reserve deficiency is Group of answer choices $20 million $60 million $71 million $51 million

Answers

Answer: $51 million

Explanation:

Firstly, we need to calculate the required reserve which will be:

= $500 × 15%

= $500 million × 0.15

= $75 million

Then, the excess reserve will be:

= $126 million - $75 million

= $51 million

Therefore, the maximum deposit outflow it can sustain without running into reserve deficiency is $51 million.

A company has the following information. What is the financial leverage ratio? Total assets $736,000 Total liabilities 314,000 Interest expense 9,400

Answers

Answer:

1.7441

Explanation:

Calculation to determine financial leverage ratio

Using this formula

Financial leverage ratio=Total assets/(Total assets-Total liabilities)

Let plug in the formula

Financial leverage ratio=736,000/(736,000 - 314,000)

Financial leverage ratio= 1.7441

Therefore the financial leverage ratio is 1.7441

Discuss 5 factors to considerwhen choosing the location of afirm​

Answers

Answer:

please give me brainlist and follow

Explanation:

Factors to Consider When Choosing a Business Location

Style of Operation. Is your business going to be formal or elegant? ..

Demographics. When considering demographics, you should think about two important angles. ...

Foot Traffic. For many businesses, foot traffic is very important. ...

Parking and Accessibility. ...

Competition. ...

Site's Image and History.

The management accountant at Lang Manufacturing Co. collected the following data in preparation for a life-cycle analysis on one of its products, a leaf blower: Item This Year Change Over Last Year Average Annual Change Over the Last Four Years Annual sales $ 2,700,000 + 1.8 % + 23.5 % Unit sales price 450 + 2.4 % + 8.3 % Unit profit 100 − 1.0 % + 3.0 % Total profit 600,000 − 1.2 % + 30.0 % The stage of the sales life cycle the product is in is:

Answers

Answer: Maturity

Explanation:

When a product gets to Maturity level, it will see its sales slow down. The sales will still be increasing but at a very low or stable rate.

At the growth state however, sales will be growing at a fast rate and so will profit.

This product is at the maturity stage because over the previous year, its sales have slowed down and are now increasing at a very low rate as a mature product would. In the past four years it was in growth based on the given figures but as of the last year, it had crossed over into maturity.

The Chilton Corporation specializes in manufacturing one type of desk lamp. Chilton allocates variable manufacturing overhead costs on the basis of machine hours. Chilton budgeted 0.3 machine hours per lamp and allocates overhead at a rate of $1.90 per machine hour. Last year Chilton manufactured 19,000 lamps, used 7,600 machine hours and incurred actual overhead costs of $12,920. What was​ Chilton's variable manufacturing overhead efficiency variance last​ year?
A. ​$9,660 favorable
B. ​$4,140 unfavorable
C. ​$4,140 favorable
D. ​$9,660 unfavorable

Answers

Answer:

See below

Explanation:

Given the above information, we can compute variable manufacturing overhead efficiency variance to be;

= (SA - AQ) × SR

Where

Standard quantity = SQ = 19,000

Actual Quantity = AQ = 7,600

Standard Rate = SR = $1.9

Variable manufacturing overhead efficiency variance

= [(19,000 × 0.3) - 7,600] × $1.9

= (5,700 - 7,600) × $1.9

= $3,610 U

Nancy Company has a balance of $15,000 in accounts receivable on December 31, of which $1,500 is more than 30 days overdue. The company has a beginning debit balance of $45 in the Allowance for Doubtful Accounts. They estimate the uncollectible accounts to be 1% of current accounts and 10% of accounts over thirty days. The adjusting entry on December 31 will include: A) $285 credit to Allowance for Doubtful Accounts B) $240 debit to Bad Debts Expense C) $195 debit to Bad Debts Expense D) $285 Debit to Allowance for Doubtful Accounts E) $330 credit to Allowance for Doubtful Accounts

Answers

Answer:

E. $330 credit to allowance for doubtful accounts

Explanation:

With regards to the above, the adjusting entry on December 31st is computed as;

= [($15,000 - $1,500)× 0.1)]

= $135

1% of the balance less than 30days

= $1,500 × 0.1 = $150

Total = $45 + $135 + $150 = $330

George noticed that some of the top salespeople on his team were spending more time checking their phones than contributing to the group's development of a new strategic plan. He decided that if his peers weren't going to make a concerted effort on the project, then he wasn't either. George put down his notepad and started tapping on his phone. Which concept best describes George's action

Answers

Answer:

The answer is "the s ucker effect"

Explanation:

Please find the image.

Some people work extremely hard but lose their drive when they see other riders who are not riding in the community. It won't fit, that's exactly what's happening here. After noting other people who did not carry out the initiative, he also began using his telephones and placed down his paper pad. It is also an operation, for which a person works less than a like independent member, as a group member.

To be effective, an item used as money should serve several functions. Select the statement that best describes money's function as a standard of deferred payment.
a. That a currency can be used to express the value goods and services that are both relatively expensive and goods and services that are relatively cheap.
b. That the purchasing power of a currency is relatively stable over time.
c. That people are willing to accept a currency in the future as compensation for debts accrued earlier.
d. That a currency is widely accepted in exchange for goods and services and therefore makes economic transactions easier.

Answers

Answer:

c. That people are willing to accept a currency in the future as compensation for debts accrued earlier.

Explanation:

Money defines the legal tender i.e. offically issued and that involved the notes, currencies, coins that are circulated via medium of exchange that govern by the government.

So here the people would to accept the  currency in the future that become compensation for the debt that accrued earlier

Hence, the option c is correct

The chapter explained why exporters cheer when their home currency depreciates. At the same time, domestic consumers find that they pay higher prices, so they should be disappointed when the currency becomes weaker. Why do the exporters usually win out, so that governments often seem to welcome depreciations while trying to avoid appreciations? (Hint: Think about the analogy with protective tariffs.)

Answers

Answer:

Exporters usually win out when their home currency depreciates because it increases demand for the exported products.

Explanation:

The foreign consumers find that the prices of the imports are now reduced because of the depreciation of the exporting nation's currency.  The impact is reduced cost of importation for the importing consumers.  When prices fall, demand tends to increase relative to supply.  For any government that wants to encourage exports for earning foreign exchange, it will always work hard to avoid currency appreciation so that consumers from the importing nation are not discouraged or made to develop alternatives.

Exporters usually win out when their home currency depreciates because the depreciation increases the demand of the exported products.

When the prices fall, demand of the products and goods tend to increase. When the home currency depreciates, this will leads to higher demand of goods from other countries so the exporters produce and exports more goods and earn more money.

The government also wants to encourage exports in order to earn foreign exchange so that's why the exporters as well as the government cheers when their home currency depreciates.

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Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson Co. issued $900,000 of 10-year, 7% bonds on May 1 of the current year at face value, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.

May 1. Issued the bonds for cash at their face amount.
Nov. 1. Paid the interest on the bonds.
Dec. 31. Recorded accrued interest for two months.

Required:
Journalize the entries to record the above selected transactions for the current year.

Answers

Answer:

May 1

Cash                                  $900000 Dr

   Bonds Payable                  $900000 Cr

November 1

Interest Expense                $31500 Dr

     Cash                                    $31500 Cr

Dec 31

Interest Expense                $10500 Dr

     Interest Payable                  $10500 Cr

Explanation:

May 1

The bonds are issued at face value which means the company has received full amount of face value which is $900000. So, we debit cash by $900000 and credit bonds payable by the same amount.

Nov 1

The bonds pay interest semi annually and the amount of semi annual interest is,

Semi annual interest = 900000 * 0.07 * 6/12 = $31500

So, when this interest is paid, interest expense is recorded by $31500 as debit and cash is credited by same amount.

Dec 31

Following the accrual basis of accounting, the interest on bond that relates to November and December of the current year will be recorded as a liability and as an expense for this year. Thus, the amount of the interest will be,

Interest accrued - two months = 900000 * 0.07 * 2/12  = 10500

Example: (0) sweeps
Rising from the sea like a goddess, the island nation of Cyprus ......... (sweep) you off
your feet with ancient monuments. Cyprus has the distinction of ........ (be) the birthplace
of Aphrodite --Goddess of Love and Beauty. With such a legendary background it is
hardly ......... (surprise) that Cyprus ....3.... (develop) into a ....4.... (tour) destination. It
........ (bless) with natural beauty that ranges from golden beaches to ......... (roll) hills.
To walk through its old streets is ....7.... (step) backwards in time. Old houses with
ornate balconies peep from weather-beaten walls, and craftsmen in small workshops
practise trades, which have not ....8.... (change) for centuries.​

Answers

Answer:

(0)Sweeps, (1)being, (2)surprising, (3)has developed, (4)tourist, (5)is blessed, (6)rolling, (7)to step, (8)changed.

Explanation:

The use of the correct form of the words refers to using or changing the given words in such a way that they correspond to the noun(s) or subjects in the sentence. This will also enable the correct construction of the sentences in a perfect and corresponding form of tenses.

The verbs given in parenthesis in the given passage will be changed accordingly as given below-

Rising from the sea like a goddess, the island nation of Cyprus sweeps you off your feet with ancient monuments. Cyprus has the distinction of being the birthplace of Aphrodite-- Goddess of Love and beauty. With such a legendary background, it is hardly surprising that Cyprus has developed into a tourist destination. It is blessed with natural beauty that ranges from golden beaches to rolling hills.

To walk through its old streets is to step backwards in time. Old houses with ornate balconies peep from weather-beaten walls, and craftsmen in small workshops practice trades, which have not changed for centuries.

Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 5,100,000 $ 9,100,000 $ 8,200,000 Average operating assets $ 1,020,000 $ 2,275,000 $ 1,640,000 Net operating income $ 214,200 $ 746,200 $ 118,900 Minimum required rate of return 17.00 % 32.80 % 14.00 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 19% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity

Answers

Answer:

1. Return on Investment = Net operating income (NOI)/Average operating assets (AOA) * 100

Division A = 21%

Division B = 32.8%

Division C = 7.25%

2. Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)

Division A = $40,800

Division B = $0

Division C = ($110,700)

3-a. If performance is being measured by ROI, Divisions A and C will accept the opportunity, while Division B will reject it because the actual rate of return of 19% is less than the minimum required rate of return of 32.8%.

3-b. Divisions A and C will accept the opportunity, while Division B will reject it.

Explanation:

a) Data and Calculations:

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

                                                 Division A       Division B       Division C

Sales                                      $ 5,100,000    $ 9,100,000   $ 8,200,000

Average operating assets    $ 1,020,000   $ 2,275,000    $ 1,640,000

Net operating income              $ 214,200      $ 746,200        $ 118,900

Minimum required rate of return 17.00 %          32.80 %           14.00 %

1. Return on Investment = Net operating income (NOI)/Average operating assets (AOA) * 100

=                                                      21%                  32.8%            7.25%

Division A = 21% ($214,200/$1,020,000 * 100)

Division B = 32.8% ($746,200/$2,275,000 * 100)

Division C = 7.25% ( $118,900/$1,640,000 * 100)

2. Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)

Division A = $40,800 ($214,200 - ($1,020,000 * 17%) )

Division B = $0 ($746,200 - ($2,275,000 * 32.8%))

Division C =($110,700) ( $118,900 - ($1,640,000 * 14%))

Investment opportunity that would yield a 19% rate of return:

                                                Division A       Division B       Division C

Sales                                      $ 5,100,000    $ 9,100,000   $ 8,200,000

Average operating assets    $ 1,020,000   $ 2,275,000    $ 1,640,000

Net operating income (19%)    $ 193,800      $ 432,250        $ 311,600

Minimum required rate of return 17.00 %          32.80 %           14.00 %

3-a. If performance is being measured by ROI, Divisions A and C will accept the opportunity, while Division B will reject it because the actual rate of return of 19% is less than the minimum required rate of return of 32.8%.

3-b. Divisions A and C will accept the opportunity, while Division B will reject it.

Residual income (loss) = Operating Income - (Operating Assets x Target Rate of Return)

Division A = $20,400 ($193,800 -  ($1,020,000 * 17%))

Division B = ($313,950) ($432,250 - ($2,275,000 * 32.8%))

Division C = $82,600 ($311,600 - ($1,640,000 * 14%))

The cost of equipment purchased by Tamarisk, Inc., on June 1, 2020, is $142,800. It is estimated that the machine will have a $8,400 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 67,200, and its total production is estimated at 672,000 units. During 2020, the machine was operated 7,020 hours and produced 64,350 units. During 2021, the machine was operated 6,435 hours and produced 56,160 units.
Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.) 2020 2021 0
(a) Straight-line - 0
(b) Units-of-output - 0
(c) Working hours - 0
(d) Sum-of-the-years-digits - 0
(e) Double-declining-balance (twice the straight-line rate) $

Answers

Answer:

A. 2020 $11,200

2021 $19,200

B. 2020 $12,870

2021 $11,232

C. 2020 $14,040

2021 $12,870

D. 2020 $19,600

2021 $30,800

E. 2020 $23,799

2021 $33,999

Explanation:

Computation depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021,

(A)Computation for depreciation expense using Straight-line method

Using this formula

(cost-salvage) / useful life x depreciation from purchase date to end year

Let plug in the formula

2020

Depreciation expense= $142,800 - 8,400 / 7

Depreciation expense= 19,200 x (7/12)

Depreciation expense= $11,200 (for 2020)

2021

Depreciation expense= $142,800 - 8,400 / 7

Depreciation expense= 19,200 (for 2021)

(B) Computation for depreciation expense using Units-of-output Method

Using this formula

(cost - salvage) / total units produced x estimated units 2020/21

Let plug in the formula

Depreciation expense 2020:

Depreciation expense= ($142,800 - 8,400) / 672,000) x 64,350

Depreciation expense= 0.20x 64,350

Depreciation expense= $12,870

Depreciation expense 2021:

Depreciation expense=($142,800 - 8,400) / 672,000) x 56,160

Depreciation expense= 0.20x 56,160

Depreciation expense= $11,232

(C) Computation for depreciation expense using Working hours

Using this formula

(cost-salvage) / total working hours x estimated working hours 2020/21

Let plug in the formula

Depreciation expense 2020:

Depreciation expense= (($142,800 - 8,400)/67,200) x 7,020

Depreciation expense= 2 x 7,020

Depreciation expense= $14,040

Depreciation expense 2021:

Depreciation expense= ($142,800 - 8,400)/67,200) x 6,435

Depreciation expense= 2 x 6,435

Depreciation expense= $12,870

(D)Computation for depreciation expense using

Sum-of-the-years'-digits

n(n+1)/2

Depreciation expense 2020:

Depreciation expense= ($142,800 - 8,400)x 7/28 x 7/12

Depreciation expense=$134,400 x (7/28) x (7/12)

Depreciation expense= 33,600 x (7/12)

Depreciation expense= $19,600

Depreciation expense 2021:

Depreciation expense= (($142,800 - 8,400) x 7/28 x 5/12) +(($142,800-8,400) x 6/28 x 7/12)

Depreciation expense= $14,000 + $16,800

Depreciation expense= $30,800

(E) Computation for depreciation expense using Double-declining-balance

First step

1 / useful life x 100 x 2

= 1/7 x 100 x 2

= 28,57%

Now let calculate the Depreciation expense for 2020 and 2021

Depreciation expense 2020:

Depreciation expense=142,800 x 28.57 x (7/12)

Depreciation expense= $23,799

Depreciation expense 2021:

Depreciation expense=(142,800 -$23,799 ) x 28.57

Depreciation expense= $33,999

Prepare the journal entries to record the following transactions on Kwang Company's books using a perpetual inventory system.

a. On March 2, Kwang Company sold $900,000 of merchandise to Sensat Company, terms 2/10, n/30. The cost of the merchandise sold was $620,000.
b. On March 6, Sensat Company returned $90,000 of the merchandise purchased on March 2. The cost of the returned merchandise was $62,000.
c. On March 12, Kwang Company received the balance due from Sensat Company. From the information in BE5-4, prepare the journal entries to record these transactions on Sensat Company's books under a perpetual inventory system.

Answers

Answer:

Solution BE5-4

                              Journal Entries

      Date      Particulars                            Debit         Credit

(a)  02-Mar   Accounts Receivable      $900,000

                             Sales Revenue                           $900,000

     02-Mar    Cost of goods sold         $620,000

                              Inventory                                    $620,000

(b)  06-Mar    Sales Return & allowances  $90,000

                             Accounts receivable                  $90,000

     06-Mar      Inventory                         $62,000

                             Cost of goods sold                      $62,000

(c)   12-Mar      Cash                                 $793,800

                       Sales Discount                 $16,200

                       ($810,000*2%)  

                              Accounts receivable                   $810,000

                              ($900000- $90000)

Solution BE5-5:

                              Journal Entries

       Date     Particulars            Debit            Credit

(a)  02-Mar   Inventory          $900,000

                          Accounts payable              $900,000

(b)  06-Mar Accounts payable  $90,000

                           Inventory                         $90,000

(c)   12-Mar  Accounts Payable $810,000

                   ($900000- $90000)

                             Inventory ($810000*2%)   $16,200

                             Cash                                   $793,800

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