Answer:
it is producing at minimum efficient scale
Explanation:
A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.
In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.
Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.
Due to the ease of entry and exit in a perfectly competitive market, in the long run, price is equal to the minimum point of the long run average cost curve.
QUESTION 2 of 10: You're opening a chic new restaurant and have 15 tables which are all square and can seat 4 people. However, you can
combine two tables to seat 6 or 3 to seat 8. for example. You have reservations for parties of 2,6, 8, 8, and 10. Once the guests arrive they
stay for the night and each reservation expects their own private table. Can you accommodate everyone's reservation requests?
A)Yes
b) No
Answer:
A) Yes
Explanation:
15 x 4 = 60 person capacity
60 - 2 = 58
58 - 6 = 52
52 - 8 = 44
44 - 8 = 36
36 - 10 = 26 person capacity left
Yes, you can accommodate everyone's reservation requests.
Yes, you can accommodate everyone's reservation requests.
Organizing the information given in the statement we have:
15 tables which are all square and can seat 4 people.to seat 6 or 3 to seat 8.reservations for parties of 2,6, 8, 8, and 10. Making the booking calculations[tex]15 * 4 = 60 \\60 - 2 = 58\\58 - 6 = 52\\52 - 8 = 44\\44 - 8 = 36\\36 - 10 = 26[/tex]
See more about accommodate at brainly.com/question/14397537
#SPJ2
the bookkeeper for Blue Spruce Equipment Repair made a number of errors in journalizing and posting, as described below. For each error: (a) Indicate whether the trial balance will balance. (b) If the trial balance will not balance, indicate the amount of the difference. (c) Indicate the trial balance column that will have the larger total.
Answer:
Note: The full question is attached as picture below
(a) (b) (c)
In Larger
Balance Difference column
1. No $725 Debit
2. Yes NA NA
3. Yes NA NA
4. No $225 Credit
5. Yes $684 NA
6. No $45 Credit
What is a commodity
Answer:
Something useful or valuable.
Explanation:
The cash account shows a balance of $85,000 before reconciliation. The bank statement does not include a deposit of $4,600 made on the last day of the month. The bank statement shows a collection by the bank of $1,880 and a customer's check for $640 was returned because it was NSF. A customer's check for $900 was recorded on the books as $1,080, and a check written for $158 was recorded as $194. The correct balance in the cash account was
Answer:
$86,024
Explanation:
The computation of the corrected balance in the cash account is as follows:
Unadjusted cash balance $85,000
Add: Collection by bank $1,880
Less: NSF Check -$640
Less: Error in recording customers check ($1,080 - $900) -$180
Add: Error in recording check ($194 - $158) -$36
Adjusted cash balance $86,024
The cost of equipment purchased by Sheridan, Inc., on June 1, 2020, is $107,100. It is estimated that the machine will have a $6,300 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 50,400, and its total production is estimated at 630,000 units. During 2020, the machine was operated 6,480 hours and produced 59,400 units. During 2021, the machine was operated 5,940 hours and produced 51,800 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 decimal places, e-g. 45,892.)
2020 2021
(a) Straight-line
(b) Units-of-output
(c) Working hours
(d) Sum-of-the-years'digits
(e) Double-declining-balance (twice the straight-line rate) $
Answer:
(a) Straight-line
depreciable value = $107,100 - $6,300 = $100,800
depreciation expense per year = $100,800 / 7 = $14,400
depreciation expense 2020 = $14,400
depreciation expense 2021 = $14,400
(b) Units-of-output
depreciable value = $107,100 - $6,300 = $100,800
depreciation expense per unit = $100,800 / 630,000 = $0.16
depreciation expense 2020 = $0.16 x 59,400 = $9,504
depreciation expense 2021 = $0.16 x 51,800 = $8,288
(c) Working hours
depreciable value = $107,100 - $6,300 = $100,800
depreciation expense per working hour = $100,800 / 50,400 = $2
depreciation expense 2020 = $2 x 6,480 = $12,960
depreciation expense 2021 = $2 x 5,940 = $11,880
(d) Sum-of-the-years' digits
depreciable value = $107,100 - $6,300 = $100,800
depreciation expense 2020 = $100,800 x 7/28 = $25,200
depreciation expense 2021 = $100,800 x 6/28 = $21,600
(e) Double-declining-balance (twice the straight-line rate)
depreciation expense 2020 = $100,800 x 2/7 = $28,800
depreciation expense 2021 = $72,000 x 2/7 = $20,571
Application of career management model
Summary of Preferred work
1. Components of PWE
2. Tasks and activities more interesting to you
3. Significant talents you want to express at work
4. Importance of independence at work
5. Importance of job security
6. Relationship between work and other parts of life
7. Physical work setting
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 31,500 Total fixed manufacturing overhead cost $ 220,500 Variable manufacturing overhead per machine-hour $ 6.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 40 Direct materials $ 685 Direct labor cost $ 1,370 If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)
Answer:
$2575
Explanation:
Total variable overhead estimated=(6*31,500)= $189,000
Hence total overhead estimated=Total variable overhead estimated+Total fixed overhead estimated = $189,000 + $220,500 = $409,500
Hence, predetermined overhead rate = $409,500 / 31,500 = $13 per machine hour
Hence, total overhead applied=(13*400) = $520
Hence, total job cost=Direct material+Direct labor+Total overhead = $685 + $1,370 + $520 = $2575
Baxter Inc. has a target capital structure of $30 million debt, $15 million preferred stock, and $55 million common equity. The company's after-tax cost of debt is 7%, its cost of preferred stock is 11%, its cost of retained earnings is 15%, and its cost of new common stock is 16%. The company stock has a beta of 1.5 and the company's marginal tax rate is 35%. What is the company's weighted average cost of capital if retained earnings are used to fund the common equity portion
Answer:
12%
Explanation:
Weighted Average Cost of Capital = Weight of Equity * Cost of Equity + Weight of Preferred Stock * Cost of Preferred Stock + Weight of Debt * Cost of Debt
Particluars Weights (given) Cost Weights*Cost
Common stock 55% or 0.55 16% = 8.8 %
Debt 30 % or 0.30 7% (after tax) = 2.1 %
Preferred Stock 15 % or 0.15 7.15 % = 1.0725 %
WACC 12 %
On November 1, 2018, a company using accrual accounting, pays for a television advertising campaign. Commercials will run evenly over six months beginning on November 1, 2018. How much Advertising Expense will be reported on an income statement prepared for the year ended December 31, 2018?
Answer:
the advertising expense reported is $340,000
Explanation:
The computation of the advertising expense reported is as follows:
= Amount to be paid × number of months ÷ given months
= $1,020,000 × 2 months ÷ 6 months
= $340,000
Here the number of months would be 2 that is taken from Nov 1, 2018 to December 31,2018
Hence, the advertising expense reported is $340,000
The following accounts are taken from the ledger of Crane Company at December 31, 2017. Notes Payable $19,600 Cash $5,900 Common Stock 24,500 Supplies 4,900 Equipment 74,500 Rent Expense 2,000 Dividends 7,800 Salaries and Wages Payable 2,900 Salaries and Wages Expense 37,200 Accounts Payable 8,800 Service Revenue 84,300 Accounts Receivable 7,800
Prepare a trial balance.
CRANE COMPANY
Trial Balance
For the Month Ended December 31, 2017For the Year Ended December 31, 2017December 31, 2017
Debit Credit
$ $
$ $
Answer:
DEBIT SIDE $140,100
CREDIT SIDE $140,100
Explanation:
Preparation of a trial balance.
CRANE COMPANY Trial Balance For the Month Ended December 31, 2017
DEBIT SIDE
Equipment $74,500
Accounts receivable $7,800
Cash $5,900
Supplies $4,900
Dividends $7,800
Salaries and Wages Expense $37,200
Rent Expense $2,000
TOTAL DEBIT SIDE $140,100
CREDIT SIDE
Common stock $24,500
Notes payable $19,600
Salaries and wages payable $2,900
Accounts payable $8,800
Service Revenue $84,300
TOTAL CREDIT SIDE $140,100
Therefore Prepare a trial balance CRANE COMPANY Trial Balance will have both. DEBIT and CREDIT BALANCE of $140,100
The income statement of a proprietorship for the month of February indicates a net income of $17,500. During the same period, the owner withdrew $25,500 in cash from the business for personal use. Would it be correct to say that the business incurred a net loss of $8,000 during the month
Answer:
It Would NOT
Explanation:
Based on the information given it Would NOT be correct for us to say that the business incurred a net loss of the amount of $8,000 during the month reason been that the amount the owner withdrew which is the amount of $25,500 in cash from the business for his personal use is the Dividend which simply indicate that the excess amount of the Dividend over the net income amount which is $8,000($25,500-$17,500)will tend to lead to a reduction in the amount of business retained earnings.
Take-home pay is about 70% of gross pay. If your annual salary is $40,000
what is your annual take-home pay?
Answer:
$28,000
Explanation:
The annual salary is $40,000
Take home is 70% of $40,000
=70% x $40,000
=70/100 x $40,000
=0.7 x $40,000
=$28,000
The ABC Lawn Company aims for a high number of clients that result in high profits. To meet its goal ABC markets its landscaping service vigorously because there are many lawn services and nurseries in the local community. As a sales-oriented company, ABC focuses on _______.
Answer:
Agressive trading technique
Explanation:
A Sales Orientation company is a company that capitalizes or dwell on selling its products and services rather than satisfying their customers wants or needs. Due to the fact that sales orientation business is bent on pushing their product out to the customer it use or employ aggressive techniques in its handling, and this will cost or involves intensive promotions and price- strategy.
Aggressive trading shoulders more risk and thereafter may be accepting a big loss.
Fran Bowen created the following budget: Budget Food $ 364 Clothing $ 164 Transportation 408 Personal expenses and recreation 307 Housing 994 She actually spent $331 for food, $416 for transportation, $1,046 for housing, $161 for clothing, and $259 for personal expenses and recreation. Calculate the variance for each of these categories, and indicate whether it was a deficit or surplus.
Answer:
Fran Bowen
Budget Vs Actual, Variance and Status:
Budget Actual Variance Status
Food $ 364 $331 $33 Surplus
Clothing 164 161 3 Surplus
Transportation 408 416 -8 Deficit
Personal expenses and recreation 307 259 48 Surplus
Housing 994 1,046 -52 Deficit
Total $2,237 $2,213 $24 Surplus
Explanation:
a) Data and Calculations:
Budget Actual Variance Status
Food $ 364 $331 $33 Surplus
Clothing 164 161 3 Surplus
Transportation 408 416 -8 Deficit
Personal expenses and recreation 307 259 48 Surplus
Housing 994 1,046 -52 Deficit
Total $2,237 $2,213 $24 Surplus
b) The difference between the estimated budget cost and the actual cost spent on each item gives rise to either surplus or deficit. This surplus or deficit is described as the variance. It is surplus when the budgeted cost is greater than the actual cost spent. It is deficit when the budgeted cost is less than the actual cost spent.
The basic economic questions that any provider of goods must ask are:
• What will be produced?
• Who will produce it?
• For whom will it be produced?
In which type of economy are these decisions made solely by the
government?
A. Mixed
B. Free
C. Command
D. Traditional
Answer:
C. Command
Explanation:
In a command economy, the government owns and controls all the factors of production. All the factors of production are owned and controlled by the government. The government does all the productions through its agencies.
The government prepares central economic plans that guide the country's economic activities. The central plans indicate what goods and services will be produced, their quantities, and prices. The plans also dictate how distributions will be done in the country.
On October 1, Bandor Company sold land (that cost $30,000) on credit for $35,000. The buyer issued an 8%, 12-month note for this amount, with the interest to be paid on the maturity date. Required: Prepare journal entries to record the sale of the land and the related year-end adjusting entry.
Answer:
Date Account Titles Debit Credit
Oct 01 8% Note Receivables $35,000
Land $30,000
Gain on sale $5,000
(To record the sale of the land)
Dec 31 Interest receivable $700
Interest Revenue $700
(35,000*8%*3/12)
(To record Interest Revenue on Note for 3 month recognized)
Which of the following statements best reflects a price-taking firm? a The firm has an incentive to charge less than the market price to earn higher revenue b If the firm were to charge more than the going price, it would sell none of its goods c The firm can sell only a limited amount of output at the market price befo
Answer:
b
Explanation:
A price taking firm is a firm that must sell at the price determined by the forces of demand and supply. This is typical of firms that in industries that sell identical products.
If the firm charges a price higher than equilibrium price, customers would go to other suppliers and the firm would sell known of its product.
There would be no incentive for a firm to sell below equilibrium price because it would be earning losses.
An example of an industry characterised by price taking firms are perfectly competitive industries.
For example, a farmer selling oranges is an example of a price taking firm
During a meeting with a potential customer, you are asked to explain the difference between two different types of systems that your company is developing. Although you feel confident that you correctly explained the systems, after the meeting you realize that you inadvertently confused some of the characteristics, and partly described a third system that the customer had not even asked about. The systems are still prototypes and there is no publicly available information about them, so it is unlikely that the potential customer will realize that you confused the systems and are not up-to-date on your company's products. What should you do?
Answer:
First, update your knowledge of the company's product (especially at this development stage). The purpose is for a demonstration of general knowledge and not for you to provide all the technical details to the potential customers. So, try to stick to the claims about the product's performance and not the details.
Secondarily, request for the documentation of research and development activities. This will provide some literature for the sales and marketing efforts to be effective. Study the available data about the product development, customer requirements, and lifecycle.
Explanation:
In marketing newly developed products, the marketing personnel should bear in mind that effective communication of value to the potential customers is what is required at the initial stage, without too much details. The effort should be to convince customers of the value of the products under development.
Murphy Company, a cash-basis, calendar-year taxpayer, received a call on December 28, year 1, from a client stating that a check for $9,000 as payment in full for their services can be picked up at their offices, two blocks away, any weekday between 1:00 and 6:00 P.M. Murphy does not pick up the check until January 3, year 2. In which year does Murphy recognize the income?
Answer:
Murphy Company
The year in which Murphy recognizes the income is year 2.
Explanation:
As a cash basis taxpayer, Murphy Company reports income and deductions in the year that they are actually paid or received. Similarly, as a cash basis taxpayer, Murphy Company deducts expenses in the year the expenses are paid off, which is not necessarily the year they were incurred. The income for services of $9,000 rendered to a customer, for which payment was received on January 3, year 2, will be recognized in year 2 and not in year 1 when the services were performed.
Oriole Company, organized in 2019, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2020.
1/2/20 Purchased patent (7-year life) $311,500
4/1/20 Purchase goodwill (indefinite life) 355,000
7/1/20 Purchased franchise with 10-year life; expiration date 7/1/30 435,000
8/1/20 Payment of copyright (5-year life) 162,000
9/1/20 Research and development costs 225,000
$1,488,500
Required:
1. Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles.
2. Make the entry as of December 31, 2020, recording any necessary amortization.
3. Reflect all balances accurately as of December 31, 2020.
Answer:
Oriole Company
a. Journal Entries:
1. December 31, 2020:
Accounts Titles Debit Credit
Patent $311,500
Goodwill 355,000
Franchise 435,000
Copyright 162,000
R & D expense 225,000
Intangibles $1,488,500
To transfer out to individual intangible accounts.
2. Amortization Expense:
Accounts Titles Debit Credit
Debit Amortization Expenses:
Patent $44,500
Franchise $21,750
Copyright $13,500
Accumulated amortization $79,950
To record amortization expense for the year.
3. December 31, 2020 balances:
December 31, 2020 Balances:
Book Value Amortization Expense Net Book Balance
Patent $311,500 $44,500 $267,000
Goodwill 355,000 $0 $355,000
Franchise 435,000 $21,750 $413,250
Copyright 162,000 $13,500 $148,500
R & D expense 225,000 $225,000 $0
Explanation:
a) Data and Calculations:
1/2/20 Purchased patent (7-year life) $311,500
4/1/20 Purchase goodwill (indefinite life) 355,000
7/1/20 Purchased franchise with 10-year life; expiration date 7/1/30 435,000
8/1/20 Payment of copyright (5-year life) 162,000
9/1/20 Research and development costs 225,000
$1,488,500
Amortization Expenses:
Patent = $44,500 ($311,500/7)
Goodwill = $0
Franchise = $21,750 ($435,000/10 * 6/12)
Copyright = $13,500 ($162,000/5 * 5/12)
Total = $79,950
December 31, 2020 Balances:
Book Value Amortization Expense Net Book Balance
Patent $311,500 $44,500 $267,000
Goodwill 355,000 $0 $355,000
Franchise 435,000 $21,750 $413,250
Copyright 162,000 $13,500 $148,500
R & D expense 225,000 $225,000 $0
Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. This contract is governed by a. the United Nations Convention on Contracts for the International Sale of Goods. b. Mexican law. c. the provisions in the laws of both countries that are similar. d. the Uniform Commercial Code.
Answer:
A) the United Nations Convention on Contracts for the International Sale of Goods.
Explanation:
From the question we are informed about Toro, S.A., which is based in Mexico, enters into a contract for the purchase of portable livestock fencing from United Fencing Company, which is based in the United States. In this case, This contract is governed by the United Nations Convention on Contracts for the International Sale of Goods. The United Nations Convention on Contracts for the International Sale of Goods can as well be regarded as
"Vienna Convention" this body is a
a multilateral treaty which was set up to bring about uniform framework as well as international commerce is concerned.
On December 31, 2019, Wintergreen, Inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25. Wintergreen received $139,875 when it issued the bonds (or $150,000 x .9325). After recording the related entry, Bonds Payable had a balance of $150,000 and Discounts on Bonds Payable had a balance of $10,125. Wintergreen uses the straight-line bond amortization method. The first semiannual interest payment was made on June 30, 2020.
Complete the necessary journal entry for June 30, 2020, by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.
Answer:
Dr Bond Interest Expense$5,756
Cr Cash $5,250
Discount on bond payable $506
Explanation:
Preparation of the necessary journal entry for June 30, 2020
Based on the information given the necessary journal entry for June 30, 2020 will be :
Dr Bond Interest Expense$5,756
($5,250 + $506 = $5,756)
Cr Cash $5,250
($150,000 x 7% x 1/2 = $5,250)
Discount on bond payable $506
($10,125/20 interest Periods = $506)
Note that in a situation where a 10-year bonds pay interest semiannually, what we would have will be 20 interest periods
On January 1, 2012, Sunland Company purchased for $690000, equipment having a useful life of ten years and an estimated salvage value of $40200. Sunland has recorded monthly depreciation of the equipment on the straight-line method. On December 31, 2020, the equipment was sold for $160000. As a result of this sale, Sunland should recognize a gain of
Answer:
$54,820
Explanation:
The computation of the gain is shown below;
But before that following calculations must be done
Annual depreciation as per the straight-line method
= ($690,000 - $40,200) ÷ (10 years)
= $64,980
Now accumulated depreciation for 9 years is
= $64,980 × 9 years
= $584,820
Now the book value is
= $690,000 - $584,820
= $105,180
Now the gain is
= Sale value - book value
= $160,000 - $105,180
= $54,820
Included in Allen Corp.'s balance sheet at June 30, 2021 is a 10%, $4,000,000 note payable. The note is dated October 1, 2019 and is payable in three equal annual payments of $2,000,000 plus interest. The first interest and principal payment was made on October 1, 2020. In Allen's June 30, 2021 balance sheet, what amount should be reported as accrued interest payable for this note
Answer:
Explanation:
The amount that should be reported as accrued interest payable for this note would be calculated as:.
= 4,000,000 × 10% × 9/12
= 4,000,000 × 0.1 × 0.75
= 300,000
The amount should be $300,000.
(C____________ ) among buyers and sellers prohibits a single buyer or seller can dictate the price of a product or resource because others can undercut that price. The regulatory mechanism of the market system is ( c___________ ). As the result, the ( __________ ________ ) is widely distributed. In other words, competition diffuses ( __________ _________ ) and limits the actions of any single seller or buyer
Answer:
(Competion____________ ) among buyers and sellers prohibits a single buyer or seller can dictate the price of a product or resource because others can undercut that price. The regulatory mechanism of the market system is ( competition___________ ). As the result, the ( _economic_________ ___power_____ ) is widely distributed. In other words, competition diffuses ( __economic________ ___power______ ) and limits the actions of any single seller or buyer.
Explanation:
Economic power refers to the ability of countries, businesses, or individuals to improve their standard of living, making decisions that benefit themselves alone, and reducing the ability of any outside force to reduce their freedom. Competition refers to the selling and buying of goods and services with others, who are also selling and buying the same goods and services. It balances economic power, preventing a single individual from monopolizing the market interaction.
Taxpayers get their refunds fastest when they file electronically.
True or False
Answer:
True
Explanation:
Assume the following shares outstanding: Preferred stock, 5%, $100 par value, noncumulative, 1,000 shares. No dividends were declared or paid in 2010 or 2011. Common stock, $1 par value, 2,000 shares. Total dividends declared in 2012 were $50,000. The total amount of dividends to which common stockholders are entitled is
Answer:
$45,000
Explanation:
The computation of the total amount of dividend paid to the common stockholder is given below:
But before that the dividend that to be paid to preference stockholder is
= Face value × Number of shares outstanding × Dividend rate
= $100 × 1,000 shares × 5%
= $5,000
The total dividend declared is $50,000
So, the balance is to be paid to common stockholder i.e.
= $50,000 - $5,000
= $45,000
The following units of an inventory item were available for sale during the year. Use this information to answer the following questions.
Beginning inventory 10 units at $55
First purchase 25 units at $60
Second purchase 30 units at $65
Third purchase 15 units at $70
The firm uses the periodic inventory system. During the year, 60 units of the item were sold.
The value of ending inventory using FIFO is:________
a. $1,350
b. $1,150
c. $1,375
d. $1,250
Answer:
The value of ending inventory using FIFO is $1,375
Explanation:
Under FIFO the items of inventory purchases earlier will be sold first and the items purchased later will be sold at last.
First, we need to calculate the total available inventory units
Numbers of units available to sale = Beginning Inventory + First purchase + Second purchase + Third purchase = 10 units + 25 units + 30 units + 15 units = 80 units
Now 60 units out of 80 are sold the remaining 20 units ( 80 units - 60 units ) will be in the ending inventory.
As per FIFO 20 units will be values as per the last 20 units purchases which will be as follow
Ending Invetory = ( 15 units x $70 ) + ( (20-15) units x $65 ) = $1,375
Company A started business on January 1, 20X1, and bought the following piece of equipment. Cost of asset $150,000 Useful life 3 Tax rate 21% 20X1 estimated tax payment 1,800 Depreciation for book and tax purposes is as follows: Book Tax 20X1 40,000 100,000 20X2 40,000 20,000 20X3 40,000 0 20X1 income statement information: Sales 638,000 Expenses (does not include depreciation expense and tax expense) 510,000 What is ending taxes payable on the December 31, 20X1 balance sheet?
Answer:
the ending tax payable as on Dec 31,20X1 is $12,600
Explanation:
The computation of the ending tax payable as on Dec 31,20X1 is as follows:
Depreciation as per Tax = $100,000
Less : Depreciation as per Book = $40,000
Tax Base of deferred tax asset = $60,000
Tax Rate = 21%
So,
= $60,000 × 21%
= $12,600
Hence, the ending tax payable as on Dec 31,20X1 is $12,600
Financial information related to the proprietorship of Ebony Interiors for February and March 2016 is as follows:
Accounts February 29, 2016 March 31, 2016
Accounts payable $329,000 $398,000
Accounts receivable 796,000 952,000
Cash 337,000 381,000
Justin Berk, capital ? ?
Supplies 33,000 34,000
Required:
1. Prepare balance sheets for Ebony Interiors as of February 29 and March 31, 2016. Refer to the lists of Accounts, Labels, and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.
2. Determine the amount of net income for March, assuming that the owner made no additional investments or withdrawals during the month.
3. Determine the amount of net income for March, assuming that the owner made no additional investments but withdrew $47,000 during the month.
Answer:
Ebony Interiors
1. Balance sheets for Ebony Interiors as of February 29 and March 31, 2016:
February 29 March 31, 2016
Cash $337,000 $381,000
Accounts receivable 796,000 952,000
Supplies 33,000 34,000
Total assets $1,166,000 $1,367,000
Accounts payable $329,000 $398,000
Justin Berk, capital 837,000 969,000
Total liabilities + equity $1,166,000 $1,367,000
2. The amount of net income for March, assuming that the owner made no additional investments or withdrawals during the month:
March 31 Capital = $969,000
February 28 Capital (837,000)
Net income $132,000
3. The amount of net income for March, assuming that the owner made no additional investments but withdrew $47,000 during the month:
March 31 Capital = $969,000
Drawings 47,000
February 28 Capital (837,000)
Net income $179,000
Explanation:
a) Data and Calculations:
Financial information for February and March 2016 is as follows:
Accounts payable $329,000 $398,000
Accounts receivable 796,000 952,000
Cash 337,000 381,000
Justin Berk, capital ? ?
Supplies 33,000 34,000
b) Net income can be determined by comparing the beginning capital (equity) with the ending capital balance (equity). This is because equity is equal to the common stock plus the retained earnings or adjusted net income. Personal withdrawals by the owner affect the ending equity, which includes the net income.