Ellis Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year: Raw materials purchased on account $475,000 Raw materials (all direct) requisitioned for use in production $476,000 Direct labor cost $640,000 Manufacturing overhead: Indirect labor cost $174,000 Other manufacturing overhead costs incurred $498,000 Cost of goods manufactured $1,469,000 Cost of goods sold (unadjusted) $1,430,000 6. The journal entry to record the transfer of completed goods from Work in Process to Finished Goods is:

Answers

Answer 1

Answer:

It is the Cost of Goods Manufactured that should be transferred to the Finished Goods account. As both of them are asset account, adding to the Finished Goods account would debit it and taking from the Work in Process account would credit it.

Date                 Account Title                                          Debit                Credit

XX-XX-XXX     Finished Goods                                $1,469,000

                        Work in Process                                                       $1,469,000


Related Questions

Bank Sohar declares the profit for the year ended 2019-20. They makes profit:

a.
When bank Sohar asset is less than the liability

b.
When their rate of interest on loan is greater than the deposit rates

c.
When their bank liability is greater than their assets

d.
When their rate of interest on loan is less than the deposit rates​

Answers

Answer:

Option B

Explanation:

A bank makes profit when it gets more returns on the loan given as compared to the interest given on the deposited money.

Hence, option B is correct. In case A and C liability is greater than asset and hence this situation does not signify a profitable situation.

Also, option D is just the opposite of option B (profitable situation).

2. The poor quality of selection will mean extra cost on ... and supervision
a Training
b. Recruitment
Work quality
d. None of the above​

Answers

Answer:

A training

Explanation:

This is the correct answer you want

please follow me. and make me brainlist.

It will means extra cost of training and supervision.

Hiring process is a process that requires careful and thorough observation from the hiring company.

Efforts are made to ensure the right people are recruited into the system to maintain standard of quality produced by the organisation

Wrong recruitment of staff could prove costly to an organisation as output will be affected.

Selection process is basically the process of choosing numbers of qualified applicant among the rest.

Poor selection process happens when the effort to filter qualified applicant among the applicants for the job was unsuccesful

In conclusion, this poor quality of selection will lead to having a pool of both unqualified and qualified applicant which will result to extra cost on Training and Supervision.

Learn more about Hiring processes here

brainly.com/question/3725599

ways in which they can create an environment that promotes
creative thinking in the workplace

Answers

The correct answer to this open question is the following.

Although you did not provide further context or reference, we can comment on the following.

The ways in which they can create an environment that promotes

creative thinking in the workplace are the following.

-Promoting open communication at any time. People in the company have to know that the leader's doors are always open. This is crucial.

-Respect diversity and cultural differences. This way people of diverse backgrounds are going to feel trusted and would express themselves freely and creatively.

-Invite people to collaborate. Do it on a daily basis, encouraging them to express their ideas, although they considered strange or crazy. You never know when a crazy idea will be a great idea in the corporate world.

-Foster a culture of change and innovation. Welcome any suggestion and never criticize it.

-Offer continual education programs and training so employees have always something to think of and learn.

Outdoor Gear Corporation manufactured 1,000 coolers during October. The following variable overhead data relates to October: Variable overhead spending variance $1,300 Unfavorable Variable overhead efficiency variance $182 Unfavorable Budgeted machine hours allowed for actual output 608 machine hours Actual cost per machine hour $28 Budgeted cost per machine hour $26Calculate the variable overhead flexible-budget variance. $1,118 favorable $1,118 unfavorable $1,482 unfavorable $1,482 favorable

Answers

Answer:

$1,482 unfavorable

Explanation:

Calculation to determine the variable overhead flexible-budget variance

Using this formula

Variable overhead flexible-budget variance=Variable overhead spending variance Unfavorable + Variable overhead efficiency variance Unfavorable

Let plug in the formula

Variable overhead flexible-budget variance=$1,300 (U) + $182 (U)

Variable overhead flexible-budget variance= $1,482 (U)

Therefore the variable overhead flexible-budget variance is $1,482 unfavorable

Maui Resort Inc. determined that the balance in its deferred tax asset account on December 31, 2020, was $50,000. Management reviewed all available positive and negative evidence to estimate that 30% of the deferred tax asset was more likely than not to be realized. The valuation allowance for deferred tax assets has a December 31, 2020, unadjusted balance of $4,000 (credit).

Required:
Record the entry to adjust the allowance on December 31, 2020.

Answers

Answer:

Maui Resort Inc.

Journal Entry:

December 31, 2020:

Debit Loss from Unrealizable DTA $31,000

Credit Allowance for Unrealizable DTA $31,000

To record the loss from unrealizable DTA and increase the balance to $35,000 (credit).

Explanation:

a) Data and Calculations:

December 31, 2020 Deferred Tax Asset (DTA) = $50,000

Estimate of realizable DTA = 30% of $50,000 = $15,000

Allowance for unrealizable DTA for 2020 = 70% of $50,000 = $35,000

Loss from unrealizable DTA = $31,000 ($35,000 - $5,000)

b) Like the Allowance for Doubtful Accounts, the DTA Valuation Allowance is a contra-account to the Deferred Tax asset Account.  It shows the amount of the deferred tax asset with a more than 50% probability of being lost or unutilized in the future as a result of the non-availability of sufficient future taxable income.

A firm produces and sells two products, Plus and Max. The following information is available relating to setup costs (a part of factory overhead): Plus Max Units produced 200 16,000 Batch size (units) 10 400 Number of setups 20 40 Direct labor hours per unit 5 5 Total direct labor hours 1,000 80,000 Cost per setup$1,080 Total setup cost$64,800 Using number of setups as the activity base, the amount of setup cost allocated to each unit of product for Plus and Max, respectively is:Multiple Choice$21.60; $.54.$60.00; $60.00.$108.00; $2.70.$54.00; $27.00.$200.00; $16,000.00

Answers

Answer:

Apportioned set-up cost

Plus =$21,600

Max=$43,200

Explanation:

Activity-based costing is a form of absorption costing where overheads are charged to product using cost drivers.  

Under this method, overheads are first analyzed and categorized by the activities responsible for them and then charged to product based on the amount of benefits enjoyed using cost drivers.

The cost driver in this scenario is the number of set-ups

Activity rate per driver is calculated as:  

Activity overhead for the period / Total cost drivers for the period

So, we can apply this formula to the scenario above:

Set-up overhead= $64,800

Total set-ups for the period = 20 + 40 = 60

Overhead cost per set-up = $64,800/60=1,080

Set-up cost allocation:

Plus - 20 × 1,080=$21,600

Max- 40 × 1,080=$43,200

Apportioned set-up cost

Plus =$21,600

Max-=$43,200

Job 412 was one of the many jobs started and completed during the year. The job required $9,500 in direct materials and 35 hours of direct labor time at a total direct labor cost of $10,400. If the job contained four units and the company billed at 70% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer

Answers

Answer:

The appropriate answer is "$8,457,50".

Explanation:

The given values are:

Direct material cost,

= $9,500

Direct labor cost,

= $10,400

Units completed in job 412,

= 4

Now,

The total cost for completion of job 412 will be:

=  [tex]Direct \ materials \ cost + Direct \ labor \ costs[/tex]

On substituting the values, we get

=  [tex]9,500 + 10,400[/tex]

=  [tex]19,900[/tex] ($)

Unit produced cost will be:

=  [tex]\frac{19,900}{4}[/tex]

=  [tex]4,975[/tex] ($)

70% of unit produced cost will be the profit margin, then

=  [tex]70 \ percent\times 4,975[/tex]

=  [tex]3,482.50[/tex] ($)

hence,

The price charged to the customer will be:

=  [tex]Unit \ product \ cost + Profit \ margin[/tex]

On substituting the values, we get

=  [tex]4,975 + 3,482.50[/tex]

=  [tex]8,457,50[/tex] ($)

is Company uses an ABC system. Which of the following statements​ is/are correct with respect to​ ABC? I. All cost allocation bases used in ABC systems are cost drivers. II. ABC systems are useful in​ manufacturing, but not in merchandising or service industries. III. ABC systems can eliminate cost distortions because ABC develops cost drivers that have a​ cause-and-effect relationship with the activities performed.

Answers

Answer:

I. All cost allocation bases used in ABC systems are cost drivers.

III. ABC systems can eliminate cost distortions because ABC develops cost drivers that have a​ cause-and-effect relationship with the activities performed.

Explanation:

I. is TRUE since the basis of ABC costing is determining, quantifying, and using cost drivers to allocate overhead costs.

III, is TRUE since the advantage of ABC costing is allocating costs based on cause and effect relationships.

II. ABC systems are useful in​ manufacturing, but not in merchandising or service industries. ⇒ FALSE

ABC costing can also be used for merchandising and service industries, although, it is mostly used in manufacturing businesses.

Problem 10-4 Partnership Formation (LO 10.2) Elaine's original basis in the Hornbeam Partnership was $40,000. Her share of the taxable income from the partnership since she purchased the interest has been $70,000, and Elaine has received $80,000 in cash distributions from the partnership. Elaine did not recognize any gains as a result of the distributions. In the current year, Hornbeam also allocated $1,000 of tax-exempt interest to Elaine. Calculate Elaine's current basis in her partnership interest. $fill in the blank 1 1,000

Answers

Answer:

$31,000

Explanation:

Calculation to determine Elaine's current basis in her partnership interest

Using this formula

Elaine's current basis= Value of original basis + (interest purchased - Cash received) + Tax exempt interest

Let plug in the formula

Elaine's current basis= $40,000 + ($70,000 - $80,000) + $1,000

Elaine's current basis= $40,000 - $10,000 + $1,000

Elaine's current basis= $31,000

Therefore Elaine's current basis in her partnership interest is $31,000

JoeFit, Inc. is using the basic FOQ model to manage its inventory for K2 microprocessors. The setup cost per order is $200 and the inventory carrying cost is $0.05 per chip per year. Suppose the company is placing the optimal order quantity in each order and the resulting total annual setup and carrying costs are $32,000. What is the annual demand of the K2 microprocessors

Answers

Answer:

51.2 million

Explanation:

The computation of the annual demand is shown below:

As we know that the total annual setup cost and the carrying cost would be equivalent to EOQ

Since the total annual setup cost & carrying cost is $32,000

So, for each it would be $16,000

Now

Total number of orders is

= $16000 ÷ $200

= 80 orders

And, Total inventory carrying cost = 0.05 × (EOQ ÷ 2)

$16000 = 0.05 × EOQ ÷ 2

$32000 ÷ 0.05 = EOQ

EOQ = 640000 units

Now

Total demand = 640000 × 80

= 51200000

= 51.2 million

The annual demand for the K2 microprocessors is 51.2 million.

The total annual setup and carrying costs are $32,000, therefore, the value of each will be:

= $32000/2

= $16000.

The total number of orders will be:

= 16000/200 = 80 orders

The economic order quantity will be:

16000 = 0.05 × (EOQ/2)

EOQ = 32000/0.05

EOQ = 640000

The total demand will be:

= 640000 × 80 = 51.2 million

In conclusion, the annual demand of the K2 microprocessors is 51.2 million.

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https://brainly.com/question/19542745

Break-even sales and sales to realize operating incomeFor the current year ended March 31, Cosgrove Company expects fixed costs of $465,000, a unit variable cost of $62, and a unit selling price of $92.a. Compute the anticipated break-even sales (units).fill in the blank 1 unitsb. Compute the sales (units) required to realize operating income of $108,000.fill in the blank 2 units

Answers

Answer:

Break even point in units=15,500 units

Units to achieve target profit=19,100 units

Explanation:

Break-even point is the level of activity at which a firm must operate such that its total revenue will equal its total costs. At this point, the company makes no profit or loss because the total contribution exactly equals the total fixed costs

Break-even point (in units) is calculated using this formula:  

Break even point in units = Total general fixed cost/ (selling price - Variable cost)

Break even point in units=  $465,000/(92-62)=15,500 units

Units to achieve target profit = (Total general fixed cost for the period + target profit)/ contribution per unit

Units to achieve target profit of 108,000 = ($465,000+  108,000)/ (92-62)=19,100 units

Break even point in units=15,500 units

Units to achieve target profit=19,100 units

JOURNALIZING SALES TRANSACTIONS. Enter the following transactions in a sales journal. Use a 6% sales tax rate.
May 1 Sold merchandise on account to J. Adams, $2,000, plus sales tax. Sale No. 488.
4 Sold merchandise on account to B. Clark, $1,800, plus sales tax. Sale No. 489.
8 Sold merchandise on account to A. Duck, $1,500, plus sales tax. Sale No. 490.
11 Sold merchandise on account to E. Hill, $1,950, plus sales tax. Sale No. 491.

Answers

Answer:

May 1

Dr Accounts Receivable- J. Adams2120

Cr Sales $2,000

Sales Tax Payable 120

May 4

Dr Accounts Receivable- B. Clark 1908

Cr Sales 1800

Cr Sales Tax Payable 108

May 8

Dr Accounts Receivable- A. Duck 1590

Cr Sales 1500

Cr Sales Tax Payable 90

May 11

Dr Accounts Receivable- E. Hill 2067

Cr Sales 1950

Cr Sales Tax Payable 117

Explanation:

Preparation of sales journal entries

May 1

Dr Accounts Receivable- J. Adams2120

(2,000+120)

Cr Sales $2,000 Sales Tax Payable 120

($2,000*6%)

May 4

Dr Accounts Receivable- B. Clark 1908

(1800+108)

Cr Sales 1800

Cr Sales Tax Payable 108

(1800*6%)

May 8

Dr Accounts Receivable- A. Duck 1590

(1500+90)

Cr Sales 1500

Cr Sales Tax Payable 90

(1500*6%)

May 11

Dr Accounts Receivable- E. Hill 2067

(1950+117)

Cr Sales 1950

Cr Sales Tax Payable 117

(1950*6%)

What kind of report is a summary of a company's total sales over a five-year period?
a product list
a market research report
a sales volume report
a customer list

Answers

I think sales volume report

What is price discrimination and how do movie theaters and restaurants practice price discrimination?​

Answers

Price discrimination is the action of selling the same product at different prices to different buyers, in order to maximize sales and profits. Movie theaters practice it by giving discounts on certain night. Example: senior citizens discount. Restaurants practice price discrimination by menu pricing.

describe the difference between real gdp and nominal gdp.​

Answers

Answer:

You Should study :))

Explanation:

Neville is a lawyer at a large law firm where he earns a salary of $170,000 per year. He is thinking of leaving the firm to set up his own law office. To do this, he would need to invest $140,000 of his savings, which currently earns 5% in interest each year. He estimates that if he starts a law office, his annual revenue will be $510,000, and his explicit financial costs will be $300,000. How much would Neville earn in economic profits or losses if he starts his own law office

Answers

Answer:

$33,000

Explanation:

Economic profit = accounting profit - implicit cost

Accounting profit= total revenue - explicit cost

Explicit cost includes the amount expended in running the business. They include rent , salary and cost of raw materials

Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives

Accounting profit = $510,000 - $300,000 = $210,000

Implicit costs = amount he would forgo as salary in the large law firm and interest he would lose on his investment

Interest he would lose on his investment = 0.05 x 140,000 = $7000

Implicit cost = $170,000 + $7000 = $177,000

Economic profit = $210,000 -  $177,000 = $33,000

Ramirez's adjusted basis in a passive activity is $45,000 at the beginning of the year. His loss from the activity for the current year is $14,200. Ramirez has wages of $65,000 and dividend income of $300. At year-end, Ramirez has the following:
1. Adjusted basis in the passive activity: $______
2. At-risk amount in the passive activity: $________
3. A suspended passive loss: $_______

Answers

Answer:

1. $30,800

2. $30,800

3. $14,200

Explanation:

1. Calculation to determine the Adjusted basis in the passive activity

Using this formula

Adjusted basis in the passive activity=Beginning adjusted basis in a passive activity-Loss activity for the current year

Adjusted basis in the passive activity=$45,000-$14,200

Adjusted basis in the passive activity=$30,800

Therefore Adjusted basis in the passive activity is $30,800

2. Calculation to determine At-risk amount in the passive activity

Using this formula

At-risk amount=Beginning adjusted basis in a passive activity-Loss activity for the current year

Let plug in the formula

At-risk amount=$45,000-$14,200

At-risk amount=$30,800

Therefore At-risk amount in the passive activity is $30,800

3. Based on the information given we were told that His loss amount from the activity for the current year was the amount of $14,200 which means that the suspended PASSIVE LOSS will be $14,200.

Grouper Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $675,803. The purchase agreement specifies an immediate down payment of $164,000 and semiannual payments of $63,101 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?

Answers

Answer:

The interest rate, to the nearest percent, used in discounting this purchase transaction 8%.

Explanation:

The interest rate can be calculated using the following RATE function in Excel:

Interest rate = RATE(nper,pmt,-pv,fv,type)*n .............(1)

Where;

nper = number of periods = number of years to maturity * number of semiannual in a year = 5 * 2 = 10

pmt =  semiannual payments = $63,101 = 63101

pv = present value = fair value balance = fair value - immediate down payment = $675,803 - $164,000 = $511,803 = 511803

fv = future value = desired cash balance after last payment = 0

type = when payments are due (0 = end of period. 1 = beginning of period) = 0

n = number of compounding period per year = number of semiannual in a year = 2

Substituting the values into equation (1), we have:

Interest rate = RATE(10,63101,-511803,0,0)*2 .................. (2)

Inputting =RATE(10,63101,-511803,0,0)*2 into an excel sheet (Note: as done in the attached excel file), the Interest rate is obtained as 8.00%.

Therefore, the interest rate, to the nearest percent, used in discounting this purchase transaction 8%.

On January 1, 2021, Vacation Destinations issues $35 million of bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:
(1) (2) (3) (4) (5)
Cash Paid Interest Increase in Carrying
Date for Interest Expense Carrying Value Value
1/1/2021 $ 32,512,829
6/30/2021 $ 1,050,000 $ 1,137,949 $ 87,949 32,600,778
12/31/2021 1,050,000 1,141,027 91,027 32,691,805
1. Were the bonds issued at face amount, a discount, or a premium?
2. What is the original issue price of the bonds? (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000).)
Issue Price: ___
3. What is the face amount of the bonds? (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000).)
Face Amount: ___
4. What is the stated annual interest rate?
5. What is the market annual interest rate? (Round your answer to the nearest whole percent.)
6. What is the total cash paid for interest assuming the bonds mature in 10 years? (Enter your answer in dollars, not millions. (i.e., $5.5 million should be entered as 5,500,000).)

Answers

Answer:

Vacation Destinations

1. The bonds were issued at a discount.

2. The original issue price of the bonds is: $32,512,829 ($9,28.94 per $1,000).

3. Face Amount is: $35,000,000

4. The stated annual interest rate is 6%.

5. The market annual interest rate is 7%.

6. The Total cash paid for interest, assuming the bonds mature in 10 years is $21,000,000.

Explanation:

a) Data and Calculations:

Face value of bonds = $35,000,000

Interest rate = 6% ($1,050,000/$35,000,000 * 100) x 2

Discounted value $32,512,829

Discounts = $2,487,171

Amortization of discounts during the first interest payment = $87,949

Amortization of discounts during the December 31, 2021 interest payment = $91,027

Original issue price = $9,28.94 ($32,512,829/35,000)

Market annual interest rate = ($1,137,949/$32,512,829 * 100) * 2 = 7%

Total cash paid for interest = $1,050,000 * 10 * 2 = $21,000,000

Portions of the bond amortization schedule appear below:

Date              Cash Paid  Interest Expense   Increase      Carrying amount

1/1/2021                                                                                $ 32,512,829

6/30/2021 $ 1,050,000      $ 1,137,949        $ 87,949         32,600,778

12/31/2021    1,050,000          1,141,027            91,027         32,691,805

Two law firms in a community handle all the cases dealing with consumer suits against companies in the area. The Abercrombie firm takes 40% of all suits, and the Olson firm handles the other 60%. The Abercrombie firm wins 70% of its cases, and the Olson firm wins 60% of its cases.
a. Develop a probability tree showing all marginal, conditional, and joint probabilities.
b. Develop a joint probability table.
c. Using Bayes’ rule, determine the probability that the Olson firm handled a particular case, given that the case was won.

Answers

Answer:

Part A: Diagram

Psrt B:

Joint Probability Table

Firms                                     Success                           Failure        

Abercrombie                          0.28                                   0.12

Oslon                                      0.36                                  0.24

Part C :  P (O/S)       =0.5625

Explanation:

The probability tree can be drawn as follows

Part A:

║⇒⇒P (A) = 0.4⇒⇒⇒⇒║⇒⇒⇒⇒P (S/A)= 0.7⇒⇒⇒⇒ P (A∩S)= 0.28

║                                     ║

║                                     ║⇒⇒⇒⇒ P (F/A)= 0.3⇒⇒⇒ P (A∩F)= 0.12

║⇒⇒⇒P (O)= 0.6⇒⇒⇒⇒║⇒⇒⇒⇒P (S/O)= 0.6⇒⇒ P (O∩S)= 0.36

                                          ║

                                          ║⇒⇒⇒P (F/O)= 0.4⇒⇒ P (O∩F)= 0.24

The marginal Probability of the two firms

P (A)= 0.4

P (O)= 0.6

Where   P (A) is the probability of Abercrombie firm

P (O)  is the probability of Olson firm

The conditional probabilities are given by

P (S/A)= 0.7

P (F/A)= 0.3

Where   P (S/A) is the conditional  probability of Success of  Abercrombie firm

P (F/A)  is the conditional  probability of failure of  Abercrombie firm

Similarly

P (S/O)= 0.6

P (F/O)= 0.4

P (S/O) is the conditional  probability of Success of  Oslon firm

P (F/O)  is the conditional  probability of failure of  Oslon firm

The probability table is given by

Firms                         Marginal          Conditional                Joint    

Abercrombie          0.4                     0.7                            0.28

                                                          0.3                           0.12

Oslon                     0.6                     0.6                            0.36

                                                        0.4                             0.24

Joint Probability Table

Firms                                     Success                           Failure        

Abercrombie                          0.28                                   0.12

Oslon                                      0.36                                  0.24

Part C :

Using Bayes Rule:

P (O/S) =   P ( O) P( S/O)/ P ( O) P( S/O)+ P (A) P(S/ A)

              = 0.6*0.6/ 0.6*0.6+0.4*0.7

              =0.36/ 0.36+0.28

              =0.5625

Possible misstatements that may occur during the cash receipts process result from cash receipts being received, but not recorded (which could facilitate embezzlement). A control technique that is used to mitigate the risk of such misstatements is to segregate the duties of the accounts receivable department, general ledger accounting records, and cash receipts. The employee who completed each duty is required to sign his/her initials, and evidence of this has been provided for you in the Accounts_Receivable file. In each transaction, proper segregation of duties is accomplished when no two duties have been completed by the same person. Use IDEA and the information from Roger Company Accounts_Receivable file to determine in which transactions segregation of duties was not properly implemented.

Answers

Answer:

There should be strong internal controls implemented and segregation of duties in the finance department.

Explanation:

There is lack of internal controls present in the company which may lead to fraud or errors. The employees assigned to record the transaction are not recording all the cash receipts and are missing some of the cash receipts which can cause errors during reconciliation. The sub divisions of finance department must be segregated and there should be a supervisor who should be responsible to review all the work done by these departments.

You run a construction firm. You have just won a contract to build a government office building Building it will require an investment of $10 million today and $5 million in one year. The government will pay you $20 million in one year upon the building's completion. Suppose the cash flows and their times of payment are certain, and the risk-free interest rate is 10%. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today?

Answers

Answer:

$3.64 million

The Npv can be turned into cash by borrowing $18.18 million today and paying back in one year time with the $20 million that would be paid

Explanation:

Net present value is the present value of after-tax cash flows from an investment less the amount invested.  

NPV can be calculated using a financial calculator

Cash flow in year 0 = $-10 million

Cash flow in year 1 = $20 million - $5 million = 15 million

I = 10%

NPV = 3.63 million

The Npv can be turned into cash by borrowing $18.18 million today as the present value of 20 million is 18.18 million

20 million / 1.10 = 18.18 million

To find the NPV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

Suppose two types of firms wish to borrow in the bond market. Firms of type A are in good financial health and are relatively low risk. The appropriate premium over the risk-free rate for lending to these firms is 2%. Firms of type B are in poor financial health and are relatively high risk. The appropriate premium over the risk-free rate for lending to these firms is 6%. As an investor, you have no other information about these firms except that type A and type B firms exist in equal numbers.
A. At what interest rate would you be willing to lend if the risk-free rate were 6%?
B. Would this market function well? What type of asymmetric information problem does this example illustrate?

Answers

Answer:

A. I would be willing to lend at average rate of 10%

B-1. No, this market will not function well.

B-2. This example illustrates an adverse selection problem.

Explanation:

A. At what interest rate would you be willing to lend if the risk-free rate were 6%?

Appropriate interest rate for type A firm bond = Premium over the risk-free rate of Type A firm + Risk-free rate = 2% + 6% = 8%

Appropriate interest rate for type B firm bond = Premium over the risk-free rate of Type B firm + Risk-free rate = 6% + 6% = 12%

Average rate = (Appropriate interest rate for type A firm bond + Appropriate interest rate for type B firm bond) / 2 = (8% + 12%) / 2 = 10%

Since the probability of any of the two firms is equal and I do not have the knowledge of which type of firm they are dealing with, I would be willing to lend at average rate of 10%.

B-1. Would this market function well?

No, this market will not function well.

The reason is that the average rate of 10% is higher than the Appropriate interest rate for type A firm bond of 8%. This would make the type A firm to withdraw from the market and only type B firm will be left in the market.

B-2. What type of asymmetric information problem does this example illustrate?

This example illustrates an adverse selection problem. This is because after type A firm which is a desirable leaves the market, only type B firm which is  the less desirable firms will be willing to borrow. This makes the quality of the market to detoriorate.

Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 40,000 for January, 60,000 for February, and 50,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows. Commissions 10 % of sales dollars Rent $ 17,000 per month Advertising 11 % of sales dollars Office salaries $ 74,000 per month Depreciation $ 55,000 per month Interest 13 % annually on a $210,000 note payable Tax rate 40 % Prepare a budgeted income statement for this first quarter. (Round your final answers to the nearest whole dollar.)

Answers

Answer:

Fortune, Inc.

Budgeted Income Statement for the first quarter ended March 31

Sales revenue        $3,750,000

Cost of goods sold   1,800,000

Gross profit            $1,950,000

Expenses:

Commission               375,000

Advertising                 412,500

Office salaries           222,000

Depreciation              165,000

Interest expense          10,075

Total expenses      $1,184,575

Net income             $765,425

Explanation:

a) Data and Calculations:

Selling price per unit = $25

Forecast sales units:

January 40,000

February 60,000

March 50,000

Total sales for the quarter = 150,000 units

Sales revenue = $3,750,000 (150,000 * $25)

Cost of goods sold = $12 per unit

Cost of goods sold = $1,800,000 (150,000 * $12)

Commission = 10% of sales dollars

Commission = $375,000 ($3,750,000 * 10%)

Rent = $17,000 per month (Total for quarter = $51,000)

Advertising = 11% of sales dollars

Advertising = $412,500 ($3,750,000 * 11%)

Office salaries = $74,000 per month (Total for quarter = $222,000)

Depreciation = $55,000 per month (Total for quarter = $165,000

Interest expense = 13% of $310,000 annually

Interest expense for the quarter = $10,075 ($310,000 * 13% * 1/4)

What is true of a good at a market clearing price?
A)
There is no competitive market for the good.
B)
Quantity supplied is greater than quantity demanded.
C)
Producers must lower inventory in order to increase demand.
D)
The quantity of a good demanded is equal to the quantity supplied.

Answers

Answer:

D. The quantity of a good demanded is equal to the quantity supplied.

Explanation:

Deman will not change, but supply decrease. Demand will decrease.

A wedding party hired a sole proprietorship to cater their wedding, and the sole proprietorship had an employee handle the entire job. If the entire wedding party gets food poisoning, the principal is liable. The employee of the sole proprietorship is also liable because he handled the entire job.

Answers

Explanation:

well I will say yes meaning true because he or she was put in charge of the entire job

At the beginning of 2020, Beerbo acquired a mine for $970,000. Of this amount, $100,000 was ascribed to the land value (the remaining portion was ascribed to the mine). Surveys conducted by geologists have indicated that approximately 12,000,000 units of ore appear to be in the mine. Beerbo incurred $170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use (when all of the minerals have been removed) is $40,000. During 2020, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. What is the amount extracted in 2020

Answers

Answer:

$225,000

Explanation:

Depletion rate = [Mine cost - Land value + Obligation to prepare the land for an alternative + Development cost] / Total number of ore extracted

Depletion rate = [$970,000 - $100,000 + $40,000 + $170,000] / $12,000,000

Depletion rate = $1,080,000/$12,000,000

Depletion rate = $0.09

Amount extracted in 2020 = Unit of ore extracted in 2020 / Depletion rate

Amount extracted in 2020 = 2,500,000 units * $0.09

Amount extracted in 2020 = $225,000

On December 31, Year 3, Alpha Company had an ending balance of $200,000 in its accounts receivable account and an unadjusted (current) balance in its allowance for doubtful accounts account of $300. Alpha estimates uncollectible accounts expense to be 1% of receivables. Based on this information, the amount of uncollectible accounts expense shown on the Year 3 income statement is:______.
a. $2.300.
b. $2200.
c. $1700.
d. $2.000.

Answers

Answer:

c. $1700.

Explanation:

The computation of the uncollectible account expense is shown below:

= Account receivable × estimated percentage - unadjusted balance

= $200,000 ×1% - $300

= $2,000 - $300

= $1,700

hence the  uncollectible account expense is $1,700

Hence, the correct option is c.

The same would be relevant

Waterway Industries purchased land as a factory site for $1335000. Waterway paid $120000 to tear down two buildings on the land. Salvage was sold for $8300. Legal fees of $5220 were paid for title investigation and making the purchase. Architect's fees were $46000. Title insurance cost $3900, and liability insurance during construction cost $4200. Excavation cost $15280. The contractor was paid $4500000. An assessment made by the city for pavement was $9700. Interest costs during construction were $258000. The cost of the land that should be recorded by Waterway Industries is $1479620. $1465520. $1469920. $1455820.

Answers

Answer:

$1,465,520

Explanation:

Calculation of cost of the land that should be recorded by Water ways industries

Cost of land = Purchase price + demolition of building - sales of salvage + legal fees + Title insurance cost + Payment assessment

Cost of land = $1,335,000 + $120,000 - $8,300 + $5,220 + $3,900 + $9,700

Cost of land = $1,465,520

Brooks Corporation has a Food Services department that provides food for employees in all other departments of the company. For September, variable food costs were budgeted at $4 per meal, based on 14,000 meals served during the month. At the end of the month, it was determined that 15,000 meals had been served at a total cost of $70,000. What is the amount of the variable food costs that should be charged to the other departments of the company at the end of the month

Answers

Answer:

the amount that should be charged for the other department is $60,000

Explanation:

The computation of the amount that should be charged for the other department is shown below:

= Variable cost per meal × number of meals

= $4 × 15,000 meals

= $60,000

hence, the amount that should be charged for the other department is $60,000

So the same would be relevant

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