Answer:
Return on investment = -6%
Explanation:
Given:
Gross revenue of restaurant = $710,000
Total expenses of restaurant = $890,000
Total investment = $3,000,000
Find:
Return on investment
Computation:
Net profit = $710,000 - $890,000
⇒ Net profit = -$180,000
Return on investment = [Net profit / Total investment]100
⇒ Return on investment = [-180,000 / 3,000,000]100
⇒ Return on investment = [-0.06]100
Return on investment = -6%
Lease M does not contain a purchase option, but the present value of the lease payments is equal to 91% of the fair value of the leased asset. Lease P does not transfer ownership to the lessee by the end of the lease term, but the lease term is equal to 77% of the estimated economic life of the leased asset. How should the lessee classify these leases
Answer:
Lease M → Finance Lease Lease P → Finance LeaseExplanation:
An operating lease is one where the leasee simply pays rental for the asset. A finance lease on the other hand, has ownership attributes even though ownership is not transferred.
According to U.S. GAAP provisions, a lease is a finance lease if the lease term in more than 75% of the estimated economic life of the leased asset and seeing as this is the case for both Lease M and P, they are both finance leases.
Sue quit her $40,000 per year job and opened a coffee shop that she calls Top Brew. In the first year, Top Brew earned $200,000 in revenue. For the same year, Top Brew paid $80,000 to employees in wages, spent $40,000 on ingredients such as coffee beans, $15,000 rent for the building to house Top Brew. Sue also used $50,000 of her personal savings to purchase equipment for Top Brew, which she was earning $4,000 in interest each year. Assuming no depreciation in the value of the equipment, Sueâs economic profit from Top Brew for the year is _______.
Answer:
$21,000
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. Implicit cost includes salary lost due to opening the shop and interest that could have been earned on the savings
Total explicit cost = $80,000 + $40,000 + $15,000 = $135,000
Accounting profit = $200,000 - $135,000 = $65,000
Economic profit = $65,000 - ($40,000 + $4,000) = $21,000
International Gems sells fine jewelry and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools. The first cost pool contains costs that are related to packaging and shipping. International has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected. The final cost pool is used for general operations of the department and the cost driver is the number of orders. Information about the activities is summarized below:
Cost Pool Estimated Total Costs Cost Driver Estimated Annual Activity
Packaging and shipping 67,200 Number of boxes shipped 16,000 boxes
Final inspection 200,000 Number of individual items inspected 100,000 items
General operations 85,000 Number of orders 10,000 orders
During the period, the Southern sales office generated 240 orders for a total of 3,560 items, which were shipped in 1,200 boxes. What amount of shipping department costs should be allocated to these sales?
Answer:67,200
Explanation:
The shipping department cost will be $14200.
What is the cost?The term cost can be termed as the price of buying something or the amount that a company spends on making a product. It is the amount that is charged on something for the product. The incurred cost can have many variables and non-variable costs like purchasing cost, labor, wages, rent, maintenance, raw material, processing cost, packaging, and transportation.
In this Question, the International gems sell their product slots. The shipping department has been divided into three cost pools. The total shipping charges will be the addition of packaging and shipping, Final Inspection, and General operations.
So, the total shipping cost =5040 + 7120 + 2040 = 14200
Thus, the costs that should be allocated to the sales with respect to the shipping charges will be $14,200.
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Wozniacki and others form Jewel LLC, with each receiving a one-fifth interest in the capital and profits of the LLC. Wozniacki receives his one-fifth interest as compensation for tax planning services he rendered prior to the formation of the LLC. The other partners each contribute $245,675 cash. The value of a one-fifth capital interest in the LLC (for each of the parties) is $245,675.
a. How much income does Wozniacki recognize as a result of this transaction, and what is the character of the income?
b. How much is Wozniacki’s basis in the LLC interest?
c. How will Jewel treat this amount?
Answer:
A. $245,675 Compensation Income
B. $245,675
C. Business deduction or the company startup
expenditure Amount
Explanation:
A. Based on the information given we were told that the Cash amount of $245,675 which is one-fifth interest was received as the amount of compensation for tax planning services that was rendered by him prior to the formation of the LLC which means that the amount of income he recognize as a result of this transaction is the amount of $245,675 and the character of the income is COMPENSATION INCOME
B. Based on the information given the amount of his BASIS in the LLC interest will be the one-fifth interest amount of $245,675
C. Based on the information given Jewel will treat this amount as either the company business deduction or the company startup expenditure amount.
The financial statements of New World, Incorporated, provide the following information for the current year: December 31 January 1 Accounts receivable $ 287,000 $ 381,500 Inventory $ 280,000 $ 266,000 Prepaid expenses $ 72,800 $ 70,000 Accounts payable (for merchandise) $ 258,300 $ 249,550 Accrued expenses payable $ 66,150 $ 79,450 Net sales $ 3,167,500 Cost of goods sold $ 1,669,500 Operating expenses (including depreciation of $63,000) $ 381,500 What is the amount of cash received from customers during the current yea
Storm Tools has formed a new business unit to produce battery-powered drills. The business unit was formed by the transfer of selected assets and obligations from the parent company. The unit's initial balance sheet on January 1 contained cash ($500,000), plant and equipment ($2,500,000), notes payable to the parent ($1,000,000), and residual equity ($2,000,000).
The business unit is expected to repay the note at $50,000 per month, plus all accrued interest at 1/2% per month. Payments are made on the last day of each month.
The unit is scheduled to produce 25,000 drills during January, with an increase of 2,500 units per month for the next three months. Each drill requires $40 of raw materials. Raw materials are purchased on account, and paid in the month following the month of purchase. The plant manager has established a goal to end each month with raw materials on hand, sufficient to meet 25% of the following month's planned production.
The unit expects to sell 20,000 drills in January; 25,000 in February, 25,000 in March, and 30,000 per month thereafter. The selling price is $100 per drill. Half of the drills will be sold for cash through a website. The others will be sold to retailers on account, who pay 40% in the month of purchase, and 60% in the following month. Uncollectible accounts are not material. Each drill requires 20 minutes of direct labor to assemble. Labor rates are $24 per hour. Variable factory overhead is applied at $9 per direct labor hour. The fixed factory overhead is $25,000 per month; 60% of this amount is related to depreciation of plant and equipment. With the exception of depreciation, all overhead is funded as incurred.
Selling, general, and administrative costs are funded in cash as incurred, and consist of fixed components (salaries, $100,000; office, $40,000; and advertising, $75,000) and variable components (15% of sales). Prepare a monthly comprehensive budget plan for Storm's new business unit for January through March. The plan should include the (a) sales and cash collections budget, (b) production budget, (c) direct materials purchases and payments budget, (d) direct labor budget, (e) factory overhead budget, (f) ending finished goods budget (assume total factory overhead is applied to production at the rate of $11.73 per direct labor hour), (g) SG&A budget, and (h) cash budget.
STORM TOOLS
Sales Budget
For the Three Months January to March
January February March
Expected Cash Collections From Sales
STORM TOOLS
Production Budget
For the Three Months January to March
January February March
STORM TOOLS
Direct Materials Budget
For the Three Months January to March
January February March
Expected Cash Payments for Materials Purchases
STORM TOOLS
Direct Labor Budget
For the Three Months January to March
January February March
STORM TOOLS
Factory Overhead Budget
For the Three Months January to March
January February March
STORM TOOLS
Ending Finished Goods Inventory
31-Mar
Units Per Unit Cost Per Unit Total
STORM TOOLS
Selling, General, and Administrative Budget
For the Three Months January to March
January February March
STORM TOOLS
Cash Budget
For the Three Months January to March
January February March
Beginning cash balance
Plus: Customer receipts
Available cash
Less disbursements:
Direct materials
Direct labor
Factory overhead
SG&A
Total disbursements
Cash surplus/(deficit)
Financing:
Planned repayment
Interest on note (1/2% of unpaid balance)
Ending cash balance
Answer:
Storm Tools
STORM TOOLS
1. Sales Budget
For the Three Months January to March
January February March
Expected Cash Collections
From Sales $1,400,000 $2,275,000 $2,500,000
STORM TOOLS
2. Production Budget
For the Three Months January to March
January February March
Production Schedule 25,000 27,500 30,000
Cost of direct materials $1,000,000 $1,100,000 $1,200,000
STORM TOOLS
4. Direct Materials Budget
For the Three Months January to March
January February March
Expected Cash Payments
for Materials Purchases $1,025,000 $1,125,000
STORM TOOLS
5. Direct Labor Budget
For the Three Months January to March
January February March
Direct labor costs $200,000 $220,000 $240,000
STORM TOOLS
6. Factory Overhead Budget
For the Three Months January to March
January February March
Variable overhead $75,000 $82,500 $90,000 $97,500
Fixed overhead 25,000 25,000 25,000 25,000
Total overhead $100,000 $107,500 $115,000 $122,500
Depreciation cost 15,000 15,000 15,000 15,000
Cash payment for o/h $85,000 $92,500 $100,000 $107,500
STORM TOOLS
7. Ending Finished Goods Inventory
31-Mar
Units Per Unit Cost Per Unit Total
January 5,000 $51.91 $259,550
February 7,500 $51.91 $389,325
March 12,500 $51.91 $648,875
STORM TOOLS
Selling, General, and Administrative Budget
For the Three Months January to March
January February March
Fixed overhead:
Salaries $100,000 $100,000 $100,000
Office expenses 40,000 40,000 40,000
Advertising 75,000 75,000 75,000
Fixed overhead $215,000 $215,000 $215,00
Variable overhead 210,000 341,250 375,000
Selling, General, and Admin. $425,000 $556,250 $590,000
STORM TOOLS
Cash Budget
For the Three Months January to March
January February March
Beginning cash balance $500,000 $1,135,000 $1,461,500
Plus: Customer receipts 1,400,000 2,275,000 2,500,000
Available cash $1,900,000 $3,410,000 $3,961,500
Less disbursements:
Direct materials $0 $1,025,000 $1,125,000
Direct labor 200,000 220,000 240,000
Factory overhead 85,000 92,500 100,000
SG&A 425,000 556,250 590,000
Total disbursements $710,000 $1,893,750 $2,055,000
Cash surplus/(deficit) $1,190,000 $1,516,250 $1,906,500
Financing:
Planned repayment $50,000 $50,000 $50,000
Interest on note
(1/2% of unpaid balance) 5,000 4,750 4,500
Ending cash balance $1,135,000 $1,461,500 $1,852,000
Explanation:
a) Data and Calculations:
Initial Balance Sheet on January 1:
Cash $500,000
Plant and equipment $2,500,000
Total assets $3,000,000
Notes payable $1,000,000
Residual equity $2,000,000
Total liabilities and equity $3,000,000
Repayment of note:
Note payment $50,000 per month
Accrued interest 250
Total repayment $50,250 per month
January February March April
Production Schedule 25,000 27,500 30,000 32,500
Cost of direct materials $1,000,000 $1,100,000 $1,200,000 $1,300,000
Ending raw materials 6,875 7,500 8,125
Production Schedule 25,000 27,500 30,000 32,500
Beginning raw materials 6,250 6,875 7,500 8,125
Purchase of materials 25,625 28,125 30,625
Cost price = $40 per drill
Payment for materials $1,025,000 $1,125,000 $1,225,000
Beginning Finished goods 5,000 7,500 12,500
Production 25,000 27,500 30,000 32,500
Ending Finished goods 5,000 7,500 12,500 15,000
Sales 20,000 25,000 25,000 30,000
Selling price = $100 per drill
Credit sales: $1,000,000 $1,250,000 $1,250,000 $1,500,000
40% month of sale 400,000 625,000 625,000 750,000
60% following month 400,000 625,000 625,000
Cash sales 1,000,000 1,250,000 1,250,000 1,500,000
Total sales collection $1,400,000 $2,275,000 $2,500,000 $2,875,000
Direct labor per drill = 20 minutes
Labor rates = $24 per hour
Variable overhead = $9 per direct labor hour
Production Schedule 25,000 27,500 30,000 32,500
Total labor hours 8,333 9,167 10,000 10,833
Direct labor costs $200,000 $220,000 $240,000 $260,000
Variable overhead $75,000 $82,500 $90,000 $97,500
Fixed overhead 25,000 25,000 25,000 25,000
Total overhead $100,000 $107,500 $115,000 $122,500
Depreciation cost 15,000 15,000 15,000 15,000
Cash payment for o/h $85,000 $92,500 $100,000 $107,500
Selling, general, and administrative costs:
Fixed overhead $215,000 $215,000 $215,000 $215,000
Variable overhead 210,000 341,250 375,000 431,250
Total selling, etc $425,000 $556,250 $590,000 $628,250
Cost of production:
Cost of direct materials $1,000,000 $1,100,000 $1,200,000 $1,300,000
Direct labor costs $200,000 $220,000 $240,000 $260,000
Overhead applied 97,746 107,529 117,300 127,071
Total costs of prodn. $1,297,746 $1,427,529 $1,557,300 $1,687,071
Production Schedule 25,000 27,500 30,000 32,500
Cost per unit $51.91 $51.91 $51.91 $51.91
David Pharma and Albritton Electronics have invested together to create a new (third) organization with 50%/50% ownership, to focus on developing diagnostic devices in Flagstaff, AZ. Through this new firm, both companies are attempting to combine their core competencies to innovate and reduce their risks associated with transaction-specific investments. The new firm operates independent of David Pharma and Albritton Electronics. Which of the following market entry (i.e., growth) strategies does this scenario best illustrate?
A. a joint venture
B. a franchisee
C. a licensing contract
D. a corporate acquisition
Answer:
A. a joint venture
Explanation:
Since in the question it is mentioned that David Pharma and Albritton Electronics invested together and want to establish a new organization having 50% ownership each also both companies are atttempting for innovate and decrease the risk so the strategy that fit to the given case is the joint venture
hence, the option a is correct
Graham Corp. has 1,000 cartons of oranges that were harvested at a cost of $30,400. The oranges can be sold as is for $36,400. The oranges can be processed further into orange juice at an additional cost of $13,000 and be sold at a price of $53,000. The net benefit (additional income) from processing the oranges into orange juice instead of selling as is would be:rev: 12_08_2020_QC_CS-243270Multiple Choice$(3,600).$16,600.$3,600.$40,000.$(16,600).
Answer:
c. $3,600
Explanation:
The total cost of orange juice = $30,400 + $13,000
The total cost of orange juice = $43,400
So, the profit on the orange juice = $53,000 - $43,400 = $9,600
Profit when oranges are sold without juice = $36,400 - $30,400
Profit when oranges are sold without juice = $6,000
So, extra income = $$9,600 - $6,000 = $3,600
Thus, the net benefit (additional income) from processing the oranges into orange juice instead of selling as is would be is $3,600
On January 1, 2019, Wasson Company purchased a delivery vehicle costing $47,550. The vehicle has an estimated 7-year life and a $4,500 residual value. Wasson uses the units-of-production depreciation method and Wasson estimates that the vehicle will be driven 105,000 miles. What is the vehicle's book value as of December 31, 2020, assuming the vehicle was driven 10,500 miles during 2019 and driven 18,500 miles during 2020
Answer:
$35,660
Explanation:
the depreciable value of the vehicle = $47,550 - $4,500 = $43,050
depreciation expense per mile driven = $43,050 / 105,000 miles = $0.41
depreciation expense 2019 = $0.41 x 10,500 = $4,305
depreciation expense 2020 = $0.41 x 18,500 = $7,585
accumulated depreciation = $11,890
book value = $47,550 - $11,890 = $35,660
Suppose the economy is experiencing an output gap of –3%. a. Select each response that indicates how monetary policy or fiscal policy can be used to raise actual output toward potential output. The government can increase its spending or reduce taxes, which will shift the IS curve to the right and increase GDP. The Fed can reduce the interest rate, which will shift the MP curve down and increase GDP. Firms can increase production, which will shift the IS curve to the right and increase GDP. The Fed can increase the interest rate, which will shift the MP curve up and reduce GDP. The government can increase taxes, which will shift the IS curve to the left and reduce GDP. b. The policies you identified in part a if used together, will cancel each other out, and the economy will remain in output gap of -3%. cannot be used together because each moves the economy in a different direction. can be used together to raise actual output toward potential output.
Answer:
Suppose the economy is experiencing an output gap of –3%
a. Monetary policy or fiscal policy can be used to raise actual output toward potential output when:
The government can increase its spending or reduce taxes, which will shift the IS curve to the right and increase GDP.
The Fed can reduce the interest rate, which will shift the MP curve down and increase GDP.
b. The policies identified in part a,
can be used together to raise actual output toward potential output.
Explanation:
Investment-Savings (IS) curve shows all the levels of interest rates and output (GDP) at which an economy's total desired investment (I) equals its total desired saving (S). This equilibrium can be achieved at a level of interest rate that maximizes output. The IS curve slopes downward, and to the right because at a lower interest rate, investment is higher, which produces more total output (GDP) for the economy.
ABC Corporation is considering dropping product D14E. Data from the company's accounting system appear below: Sales $ 660,000 Variable expenses $ 285,000 Fixed manufacturing expenses $ 244,000 Fixed selling and administrative expenses $ 192,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $195,500 of the fixed manufacturing expenses and $110,500 of the fixed selling and administrative expenses are avoidable if product D14E is discontinued. Required: a. According to the company's accounting system, what is the net operating income earned by product D14E
Answer: $61000 Loss
Explanation:
The net operating income earned by product D14E will be calculated as:
Sales : $660,000
Less: Variable expenses : $285,000
Less: Fixed manufacturing expenses : $244,000
Less: Fixed selling and distribution expenses : $192,000
Net operating income = -$61000
After a rough week and against her better judgment, Pari tells Vihaan she is tired of arguing with him over trip reports. She makes an exception for him and, against policy, says he no longer needs to fill them out. A week later, another sales rep comes to her and asks to stop preparing reports, just like Vihaan. Why do you think Pari now has a managerial problem
Answer:
Hello the options related to your question is missing below are the missing options
A. She administered punishment to Vihaan.
B. She misused the ERG theory with Vihaan.
C. She failed to provide procedural justice.
D. She misused the expectancy theory with Vihaan.
answer : She failed to provide procedural justice. ( C )
Explanation:
Pari has a managerial problem because she failed to provide procedural Justice
Procedural justice is simply treating every employee equally as regards to a certain work procedure at the workplace, Pari did not exhibit that when she excepted Vihaan
Question 13 of 20
Todd's manager has asked him to write a report on ways to increase safety in
the warehouse. Todd used the Internet to research statistics and
recommendations for improving safety in the workplace. He feels like he
pulled together a really strong document and that his manager will be
pleased. However, when he is called into his manager's office, his manager is
concerned and tells him that he has been unethical in his work. What did
Todd do?
A. He likely used the Internet for research, and violated company
confidentiality rules.
B. He likely did not cite his research, and committed plagiarism.
C. He likely told his co-workers he was writing a report, and violated
co-worker's privacy.
D. He likely completed the report on time, and likely violated
company honesty policy
Answer:
he answer is : He likely did not cite his research, and committed plagiarism. Todd's manager has asked him to write a report on ways to increase safety in the warehouse. Todd used the Internet to research statistics and recommendations for improving safety in the workplace. He feels like he pulled together a really strong document and that his manager will be pleased. However, when he is called into his manager's office, his manager is concerned and tells him that he has been unethical in his work. He likely did not cite his research, and committed plagiarism. It is the practice of taking someone else's work or ideas and passing them off as one's own.
Explanation:
To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Daun purchased the stereo systems for $200,000 and sold them for $310,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 3 percent of sales. During the year, she paid $3,420 cash to replace a defective tuner.
Required:
Prepare an income statement and statement of cash flows for Daun's first year of operation. Based on the information given, what is Daun's total warranties liability at the end of the accounting period?
Answer:
See below
Explanation:
•Income statement for Daun's first year of operation
Sales revenue
$310,000
Less;
Cost of goods sold
($200,000)
Gross profit
$110,000
Less:
Warranty expense
($9,300)
Net income
$100,700
• Statement of cash flow for Daun's first year of operation
Collection from customers
$310,000
Less:
Paid to suppliers
($200,000)
Warranty payment
($3,420)
Net Cash flow
$106,580
• Daun's Warranty liability/Expense at the end of the accounting period.
= $310,000 × 3%
= $9,300
Nthanda Corporation has just completed a physical inventory count at year end, December 31, 2020. Only the items on the shelves, in storage, and in the receiving area were counted and costed on the FIFO basis. The inventory amounted to K80,000. During the audit, the independent Accountant discovered the following additional information:
(a) There were goods in transit on December 31, 2020, from a supplier with terms FOB Shipping Point, costing K10,000. Because the goods had not arrived, they were excluded from the physical inventory count.
(b) On December 27, 2020, a regular customer purchased goods for cash amounting to K1,000 and had them shipped to a bonded warehouse for temporary storage on December 28, 2020. The goods were shipped via common carrier with terms FOB Destination. The customer picked the goods up from the warehouse on January 4, 2021. Nthanda Company had paid K500 for the goods and, because they were in storage, Nthanda included them in the physical inventory count.
(c) Nthanda Company, on the date of the inventory, received notice from a supplier that goods ordered earlier, at a cost ofK4,000, had been delivered to the transportation company on December 28, 2020; the terms were FOB shipping point. Because the shipment had not arrived on December 31, 2020, it was excluded from the physical inventory.
(d) On December 31, 2020, there were goods in transit to customers, with terms FOB shipping point, amounting to K800 (expected delivery on January 8, 2021). Because the goods had been shipped, they were excluded from the physical inventory count.
(e) On December 31, 2020, Nthanda Company shipped K2,500 worth of goods to a customer, FOB destination. The goods arrived on January 5, 2020. Because the goods were not on hand, they were not included in the physical inventory count.
(f) Nthanda Company, as the consignee, had goods on consignment that cost K3,000. Because these goods were on hand as of December 31, 2020, they were included in the physical inventory count.
Required
i. Pass an analysis of the above information and calculate a correct amount for the ending inventory. Give explanation of the basis for your treatment of each item.
Carey Company had sales in 2016 of $1,560,000 on 60,000 units. Variable costs totaled $900,000, and fixed costs totaled $500,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3). However, to process the new raw material, fixed operating costs will increase by $100,000. Management feels that one-half of the decline in the variable costs per unit should be passed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 5% increase in the number of units sold.
(a) Prepare a projected CVP income statement for 2017, assuming the changes have not been made, and
(b) assuming that changes are made as described.
Answer:
Results are below.
Explanation:
Giving the following information:
Selling price per unit= 1,560,000 / 60,000= $26
Unitary variable cost= 900,000 / 60,000= $15
Fixed costs= $500,000.
First, the income statement without the changes:
Sales= 1,560,000
Total varaible cost= (900,000)
Contribution margin= 660,000
Total fixed costs= (500,000)
Net operating income= 160,000
Now, with the changes:
Unitary variable cost= (15*0.8)= 12
Selling price= 26 - 1.5= $24.5
Sales in units= 60,000*1.05= 63,000
Fixed costs= 500,000 + 100,000= $600,000
Sales= 24.5*63,000= 1,543,500
Total variable cost= (12*63,000)= (756,000)
Total contribution margin= 787,500
Fixed costs= (600,000)
Net operating income= 187,500
You expect to receive a payout from a trust fund in 3 years. The payout will be for $10,200. You plan to invest the money at an annual rate of 6.2 percent until the account is worth $17,800. How many years do you have to wait from today
Answer:
n= 12.25 years
Explanation:
Giving the following information:
Present value= $10,200
Future value= $17,800
Interest rate= 6.2%
First, we need to calculate the number of years it will take the investment to reach $17,80. We need to use the following formula:
n= ln(FV/PV) / ln(1+i)
n= ln(17,800/10,200) / ln(1.062)
n= 9.25 years
Now, the total number of years:
n= 9.25 + 3
n= 12.25 years
Texas Roadhouse opened a new restaurant in October. During its first three months of operation, the restaurant sold gift cards in various amounts totaling $1,800. The cards are redeemable for meals within one year of the purchase date. Gift cards totaling $728 were presented for redemption during the first three months of operation prior to year-end on December 31. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Texas Roadhouse will remit sales taxes in January.
Required:
a. Record (in summary form) the $2,500 in gift cards sold ( keeping in mind that, in actuality the firm would record each sale of a gift card individually ).
b. Record the $728 in gift cards redeemed, including the 4% sales tax assessed.
c. Determine the balance in the Unearned Revenue account ( remaining liability for gift cards ) Texas Roadhouse will report on the December 31 balance sheet.
Answer:
General Journal Debit Credit
1 Cash 2600
Unearned revenue 2600
(To record gift cards sold)
2 Unearned revenue 832
Sales tax payable 32
Sales revenue 800
(To record gift cards redeemed)
alculating Net Float [LO1] Each business day, on average, a company writes checks totaling $17,000 to pay its suppliers. The usual clearing time for the checks is four days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $22,000. The cash from the payments is available to the firm after two days
Answer:
A.Collection Float ($44,000)
Disbursements Float $68,000
Net Float $24,000
B.Collection Float ($44,000)
Disbursement Float $68,000
Net Float $24,000
Explanation:
A. Calculation the company's disbursement float, collection float, and net float
Per Day Clearing Days Float
Collection Float ($22,000) ×2days = ($44,000)
Disbursements Float $17,000 × 4days = $68,000
Net Float $24,000
($68,000-$44,000)
B. Calculation for the company's disbursement float, collection float, and net float if the collected funds were available in two days instead of four
Per Day Clearing Days Float
Collection Float ($22,000) ×2 days =($44,000)
Disbursement Float $41,500 ×4days= $68,000
Net Float $24,000
($68,000-$44,000)
Hence,
A.Collection Float ($44,000)
Disbursements Float $68,000
Net Float $24,000
B.Collection Float ($44,000)
Disbursement Float $68,000
Net Float $24,000
Lamont Company produced 80,000 machine parts for diesel engines. There were no beginnings or ending work-in-process inventories in any department. Lamont incurred the following costs for May:
Molding Department Grinding Department Finishing Department
Direct materials $12,000 $5,400 $8,000
Direct labor 10,000 8,500 12,000
Applied overhead 17,000 14,000 11,000
Required:
1. Calculate the costs transferred out of each department.
2. Prepare the journal entries corresponding to these transfers. Also, prepare the journal entry for Grinding that reflects the costs added to the transferred-in goods received from Molding.
3. What if the Grinding Department had an ending WIP of $11,000? Calculate the cost transferred out.
4. What is the effect on finished goods calculated in Requirement 1, assuming the other two departments have no ending WIP?
Answer:
Lamont Company
1. The costs transferred out of each department:
Molding Grinding Finishing
Cost transferred out $39,000 $66,900 $86,900
WIP $11,000
Cost transferred out $39,000 $55,900 $86,900
2. Journal Entries:
Debit WIP: Grinding $39,000
Credit WIP: Molding $39,000
To record the transfer of cost from Molding to Grinding.
Debit Finishing $66,900
Credit WIP: Grinding $66,900
To record the transfer of cost from Grinding to Finishing.
Debit Finished Inventory $86,900
Credit Finishing $86,900
To record the transfer of cost from Finishing to Finished Inventory.
3. Molding Grinding Finishing
WIP $11,000
Cost transferred out $39,000 $55,900 $86,900
4. The effect of the ending WIP in the Grinding Department is that the cost of inventory transferred to the Finishing Department is reduced by the amount of the Work-in-Process Inventory ($11,000).
Explanation:
a) Data and Calculations:
Costs incurred in May:
Molding Grinding Finishing
Direct materials $12,000 $5,400 $8,000
Direct labor 10,000 8,500 12,000
Applied overhead 17,000 14,000 11,000
Total costs
transferred out $39,000 $27,900 $31,000
Grinding costs -39,000 39,000
Total costs 0 $66,900 $31,000
Cost transferred out to finishing -55,900 55,900
Total costs 0 0 $86,900
WIP 0 11,000
Burbank Company owns the building occupied by its administrative office. The office building was reflected in the accounts at the end of last year as follows:
Cost when acquired …………………………………….…… $330,000
Accumulated depreciation (based on straight-line depreciation, an
estimated life of 50 years, and a $30,000 residual value) ………. 78,000
During January of this year, on the basis of a careful study, management decided that the total estimated useful life should be changed to 30 years (instead of 50) and the residual value reduced to $22,500 (from $30,000). The depreciation method will not change, i.e. they will keep using straight-line deprecation.
Required:
1. Compute the annual depreciation expense prior to the change in estimates.
2. Compute the annual depreciation expense after the change in estimates.
3. What will be the net effect of changing estimates on the balance sheet, net income, and cash flows for the year?
Answer:
Burbank Company
1. The annual depreciation expense prior to the change in estimates is:
= $6,000.
2. The annual depreciation expense after the change in estimates is:
= $10,250.
3. The net effect of the changing estimates on the balance sheet, net income, and cash flows for the year:
The balance sheet = the accumulated depreciation will increase to $88,250.
The net income will reduce by $4,250.
The cash flows will not be affected, as depreciation is not a cash flow item.
Explanation:
a) Data and Calculations:
Cost of office building = $330,000
Accumulated depreciation = $78,000
Estimated useful life = 50 years
Estimated residual value = $30,000
Depreciable amount = $300,000
Annual depreciation expense (straight-line method) = $6,000 ($300,000/50)
Revised Estimates:
Cost of office building = $330,000
Accumulated depreciation = $78,000
Estimated useful life = 30
Residual value = $22,500
Depreciable amount = $307,500
Annual depreciation expense (straight-line method) = $10,250 ($307,500/30)
A stock is expected to pay a dividend of $1.00 at the end of the year (i.e., D1 = $1.00), and it should continue to grow at a constant rate of 4% a year. If its required return is 15%, what is the stock's expected price 3 years from today? Round your answer to two decimal places. Do not round your intermediate calculations.
Answer:
$10.23
Explanation:
The constant growth dividend model can be used to determine the value of the stock
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
Dividend price in 3 years = D x (1 + g)^t
g = growth rate = 4%
t = time = 3
d = dividend = 1
$1 x (1.04)^3 = 1.124864
price = $1.124864 / (0.15 - 0.04) = $10.23
Reuse of large amounts of copyrighted film in a documentary would not constitute a copyright infringement.
a) True
b)False
Answer:
B. False
Explanation:
I majored in Business
Michelle is an active participant in the rental condominium property she owns. During the year, the property generates a ($17,500) loss; however, Michelle has sufficient tax basis and at-risk amounts to absorb the loss. If Michelle has $120,000 of salary, $10,500 of long-term capital gains, $3,500 of dividends, and no additional sources of income or deductions, how much loss can Michelle deduct?
Answer: $8,000
Explanation:
A special rule allows Michelle to classify up to $25,000 as losses against her nonpassive income.
If Michelle's modified adjusted gross income (MAGI) exceeds $100,000 however, the amount that exceeds the $100,000 will be reduced by 50% and deducted from the exemption allowed.
Loss deduction = Exemption allowed - [(Nonpassive income - MAGI limit) * 50%)
= 25,000 - [ (120,000 + 10,500 + 3,500 - 100,000) * 50%]
= $8,000
On January 1, Bloomingdale, Inc. borrows $92,000 from First Estate Bank. The loan is due in one year along with 4% interest. The company is preparing its quarterly report for March 31. Which of the following best describes the necessary accrual for interest expense?
a. $3,680 decrease liabilities, decrease cash
b. $3680 increase expenses, decrease cash
c. $ 920 decrease abilities, decrease cash
d. $920 increase abities, increase expenses
Answer:
d. $920 increase liabilities, increase expenses
Explanation:
The journal entry is given below:
On March 31
Interest Expense Dr. $920 ($92,000 × 4% × 3 ÷ 12)
To Interest Payable $920
(being interest expense is recorded)
Here interest expense is debited as it increased the expense and credited the liabilities as it also increased the liabilities
Therefore the option d is correct
Prepare summary journal entries to record the following transactions and events a through g for a company in its first month of operations.
a. Raw materials purchased on account, $92,000.
b. Direct materials used in production, $40,000. Indirect materials used in production, $25,000.
c. Paid cash for factory payroll, $65,000. Of this total, $45,000 is for direct labor and $20,000 is for indirect labor.
d. Paid cash for other actual overhead costs, $7,750.
e. Applied overhead at the rate of 120% of direct labor cost.
f. Transferred cost of jobs completed to finished goods, $69,000.
g. Jobs that had a cost of $69,000 were sold.
h. Sold jobs on account for $98,000.
Answer:
Journal Entries:
a. Debit Raw materials $92,000
Credit Accounts payable $92,000
To record the purchase of raw materials on account.
b. Debit Work-in-Process $40,000
Debit Manufacturing overhead $25,000
Credit Raw materials $65,000
To record direct and indirect materials.
c. Debit Payroll Expense $65,000
Credit Cash $65,000
To record the payment of payroll.
Debit Work-in-Process $45,000 (direct labor)
Debit Manufacturing overhead $20,000 (indirect labor)
Credit Payroll Expenses $65,000
To record the payment of direct and indirect labor.
d. Debit Manufacturing overhead $7,750
Credit Cash $7,750
To record the payment for other overhead costs.
e. Debit Work-in-Process $54,000
Credit Manufacturing overhead $54,000
To record overhead applied at the rate of 120% of direct labor cost.
f. Debit Finished goods $69,000
Credit Work-in-Process $69,000
To record the transfer of completed jobs to finished goods inventory.
g. Debit Cost of goods sold $69,000
Credit Finished goods $69,000
To record the cost of goods sold.
h. Debit Accounts receivable $98,000
Credit Sales revenue $98,000
To record the sale of goods on account.
Explanation:
a. Raw materials $92,000 Accounts payable $92,000
b. Work-in-Process $40,000 Manufacturing overhead $25,000 Raw materials $65,000
c. Payroll Expense $65,000 Cash $65,000 Work-in-Process $45,000 (direct labor) Manufacturing overhead $20,000 (indirect labor) Payroll Expenses $65,000
d. Manufacturing overhead $7,750 Cash $7,750
e. Work-in-Process $54,000 Manufacturing overhead $54,000 (at the rate of 120% of direct labor cost)
f. Finished goods $69,000 Work-in-Process $69,000
g. Cost of goods sold $69,000 Finished goods $69,000
h. Accounts receivable $98,000 Sales revenue $98,000
2. Shell Biotech Corporation is considering two mutually exclusive capital investment projects. Project 1 costs $75,000, and would produce annual cash flows of $16,200 for each of the next 9 years. Project 2 also costs $75,000, but would produce annual cash flows of $14,000 for each of the next 12 years. If Shell's cost of capital is 11%, which alternative should be chosen
Answer:
Project 2
Explanation:
The better alternative can be determined by calculating the npv
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
Project 1
Cash flow in year 0 = $-75,000
Cash flow each year fromyear 1 to 9 = $16,200
I = 11%
NPV = 14,700.17
Project 2
Cash flow in year 0 = $-75,000
Cash flow each year fromyear 1 to 12 = $14,000
I = 11%
NPV = 15,892.99
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
The following data pertain to Ronaldo Enterprises:
Variable manufacturing cost $70
Variable selling and administrative cost 20
Applied fixed manufacturing cost 40
Allocated fixed selling and administrative cost 15
What price will the company charge if the firm uses cost-plus pricing based on absorption manufacturing cost and a markup percentage of 110%?
A. $231.
B. $147.
C. $84.
D. $210.
Answer:
its b i am pretty sure its b
The effect on existing deferred income tax accounts when a change in the tax rate is enacted into law should be Group of answer choices reported as an adjustment to income tax expense in the period of change. applied to all temporary or permanent differences that arise prior to the date of the enactment of the tax rate change, but not subsequent to the date of the change. The tax change should be ignored until the year it is enacted. considered, but it should only be recorded in the accounts if it reduces a deferred tax liability or increases a deferred tax asset.
Answer:
Reported as an adjustment to income tax expense in the period of change
Explanation:
The deferred tax expense is generally defined as an increase in balance of deferred tax liability minus the increase in balance of deferred tax asset. It is an increase in the deferred tax liability balance usually from the beginning to the end of the accounting period.
The taxable income of a corporation is simply different from accounting income due to the fact that companies use the full accrual method for financial reporting but use the modified cash basis for tax reporting.
Tax is commonly defined as an involuntary charge imposed by the government to provide revenue for government which are use for development of public institution,roads and others. Tax laws are enacted to regulate, monitor payment of tax.
Trueware Corporation is a start-up firm with a capital structure that includes 25 percent debt. Trueware has no preferred stock. The firm has two possible scenarios for its operations: Ruby or Emerald. The Ruby scenario has a 70 percent probability of occurring and the forecast earnings before interest and taxes (EBIT) in this scenario is $80,000. The Emerald scenario has a 30 percent chance of occurring and the EBIT is expected to be $32,000. Further, the firm's cost of debt is 10 percent. The firm has $500,000 in total assets and its marginal tax rate is 30 percent. The company has 22,000 shares of common stock outstanding. Calculate the difference in earnings per share (EPS) for the capital structure
Answer:
$1.53
Explanation:
Calculation to determine the difference in earnings per share (EPS) for the capital structure
Debt = 0.25 × Total assets = 0.25 × $500,000
Debt= $125,000
Equity = (1 − 0.25) × Total assets = 0.75 × $500,000
Equity = $375,000
Net income (NIRuby) = [EBIT - (Cost of debt × Total debt)] × (1 - Tax rate)
Net income (NIRuby) = [$80,000 - (0.10 × $125,000)] × (1 - 0.3)
Net income (NIRuby= $47,250
EPSRuby = Net income/Number of shares outstanding
EPSRuby = $47,250/22,000 shares
EPSRuby= $2.15 per share
Net income (NIEmerald) = [EBIT - (Cost of debt × Total debt)] × (1 - Tax rate)
Net income (NIEmerald) = [$32,000 - (0.10 × $125,000)] × (1 - 0.3)
Net income (NIEmerald) = $13,650
EPSEmerald = Net income/Number of shares outstanding
EPSEmerald = $13,650/22,000 shares
EPSEmerald= $0.62 per share
Difference between the earnings per share = $2.15 - $0.62
Difference between the earnings per share= $1.53
Therefore the difference in earnings per share (EPS) for the capital structure is $1.53