Answer:
2.7 times
Explanation:
The computation of the current ratio is shown below:
Current ratio = Current assets ÷ Current liabilities
where,
Current assets = Cash + account receivable + inventory + marketable securities + prepaid expense
= $30,000 + $65,000 + $72,000 + $36,000 + $2,000
= $205,000
And, the current liabilities is
- Account payable + accrued liabilities + short term note payable
= $40,000 + $7,000 + $30,000
= $77,000
So, the current ratio is
= $205,000 ÷ $77,000
= 2.7 times
Money's power to buy goods and services changes ________.
Answer:
...with rates of inflation.
Explanation:
The more that a particular currency appears in the market without any work (value) being associated with that currency, the smaller the value of that particular form of currency (For example, the U.S. dollar). When inflation is high, banks will increase interest rates on loans in order to get rid of some of the of the surplus currency in the market, bringing down inflation and increasing the total value of a particular form of currency.
Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of five years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods. a. Straight-line: First year $ Second year $ b. Units-of-activity (1,200 hours first year; 2,250 hours second year): First year $ Second year $ c. Double-declining-balance: First year $ Second year $
Answer and Explanation:
The computations is shown below;
a) Straight-line method:
= (Original cost - residual value) ÷ (useful life)
= ($360,000 - $10,000) ÷ (5 years)
= ($350,000) ÷ (5 years)
= $70,000
In this method, the depreciation is same for all the remaining useful life
Therefore for first year and second year the same depreciation i.e $70,000 is to be charged separately
(b) Units-of-production method:
= (Original cost - residual value) ÷ (estimated operating hours)
= ($360,000 - $10,000) ÷ (14,000 hours)
= ($350,000) ÷ (14,000 hours )
= $25 per hour
For the first year
= Operating hours in first year × depreciation per hour
= 1,200 hours × $25
= $30,000
And for the second year, it would be
= Operating hours in second year × depreciation per hour
= 2.250 hours × $25
= $56,250
(c) Double-declining balance method:
First we have to find the depreciation rate which is shown below:
= One ÷ useful life
= 1 ÷ 5
= 20%
Now the rate is double So, 40%
In year 1, the original cost is $360,000, so the depreciation is $144,000 after applying the 40% depreciation rate
And, in year 2, the ($360,000 - $144,000) × 40% = $86,400
On June 30, 2021, Moran Corporation issued $13.5 million of its 8% bonds for $12.2 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2021. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021?
Answer:
$70,000
Explanation:
Moran Corporation
Semiannual interest paid on 31 Dec 2021
= $13,500,000*8%*6/12
= $540,000
Therefore If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021 will be $70,000
Effective interest expense on 31 Dec.2021
= $12,200,000 * 10% * 6/12
= $610,000
Bond discount to be reduced for 6 months ended 31 Dec 2021
= $610,000 - $540,000
= $70,000
Abbott Landscaping purchased a tractor at a cost of $30,000 and sold it three years later for $16,200. Abbott recorded depreciation using the straight-line method, a five-year service life, and a $4,000 residual value. Tractors are included in the Equipment account.
Assume the tractor was sold for $12,400 instead of $19,800. Record the sale.
Answer:
Debit Credit
Cash $16,200
Accumulated depreciation-equipment $15,600
Gain on sale of equipment 1,800
Equipment 30,000
(To record sale of equipment)
Explanation:
According to the given data we have the following:
Equipment=$30,000
Cash=$16,200
Therefore,The accumulated depreciation would be=($30,000-4,000)/5*3
The accumulated depreciation would be=$15,600
Therefore, the sale to record would be as follows:
Debit Credit
Cash $16,200
Accumulated depreciation-equipment $15,600
Gain on sale of equipment 1,800
Equipment 30,000
(To record sale of equipment)
At the beginning of last year, Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Tari's fixed manufacturing overhead budget variance was $12,000 favorable. Its fixed manufacturing overhead volume variance was $19,200 favorable. Actual direct labor-hours for the year were 625,000. What was Tari's total standard machine-hours allowed for last year's output?
Answer:
The answer is 612800 hours
Explanation:
Solution
Recall that:
At the start of last year, Tari Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours.
At the end of the year, Tari's fixed manufacturing overhead budget variance was $12000 favorable. Its fixed manufacturing overhead volume variance was $19200 favorable. The direct actual labor-hours for the year were 625,000. What was Tari's standard total machine-hours allowed for last year's output?
Now,
The Budgeted at beginning of the year = $900,000
fixed manufacturing overhead for = 600,000 machine hours
Thus,
The Standard = $900,000 / 600,000 hours = $1.5 fixed overhead / machine/machining hour
So,
At end of year, manufacturing overhead volume was $19,200 favorable which means that,
$19200 / $1.5 = 12800 additional hours.
Total Standard Machine Allowance Allowed for output = 600,000 +12800 = 612800 hours
Therefore, Tari's total standard machine-hours allowed for last year's output is 612800 hours
If Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Its fixed manufacturing overhead volume variance was $19,200 favorable. What Tari's total standard machine-hours allowed for last year's output will be is: 612,800 machine hours
Using this formula
Total standard machine-hours=Machine -hours level of activity+ [Fixed manufacturing overhead volume variance÷(Fixed manufacturing overhead÷ Machine -hours level of activity)]
Where:
Machine -hours level of activity=600,000
Fixed manufacturing overhead volume variance=$19,200
Fixed manufacturing overhead=$900,000
Let plug in the formula
Total standard machine-hours=600,000+[$19,200÷($900,000÷600,000)]
Total standard machine-hours=600,000+($19,200÷1.5)
Total standard machine-hours=600,000+12,800
Total standard machine-hours=612,800 machine hours
Inconclusion if Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Its fixed manufacturing overhead volume variance was $19,200 favorable. What Tari's total standard machine-hours allowed for last year's output will be is: 612,800 machine hours
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TechSolvers produces 8-foot USB cables. During the past year, the company purchased 500,000 feet of plastic-coated wire at a price of $0.25 per foot. The direct materials standard for the cables allows 8.5 feet of wire at a standard price of $0.23. During the year, the company used a total of 535,000 feet of wire to produce 63,000 8-foot cables. Calculate TechSolvers’ direct materials quantity variance for the year. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)
Answer:
$8050
Explanation:
The direct materials quantity variance is the difference between the standard cost and the actual quantity at standard price. This variance in quantity is as a result of the difference between the actual and expected quantity of materials used. The formula for direct materials quantity variance is given as:
Direct materials quantity variance = Standard Price x (Standard Quantity – Actual Quantity)
Given that: Standard Price = $0.23, Standard Quantity = 535000, Actual Quantity = 500000.
Direct materials quantity variance = $0.23 × (535000 - 500000) = $8050
The December 31, 2020 inventory of Carla Vista Company consisted of four products, for which certain information is provided below. Product Original Cost Replacement Cost Estimated Disposal Cost Expected Selling Price Normal Profit on Sales A $30.00 $28.00 $8.00 $44.00 25.00% B $44.00 $42.00 $10.00 $54.00 20.00% C $124.00 $119.00 $29.00 $210.00 30.00% D $18.00 $15.40 $6.00 $30.00 20.00% Using the lower-of-cost-or-market approach applied on an individual-item basis, compute the inventory valuation that should be reported for each product on December 31, 2020. (Round answers to 2 decimal places, e.g. 52.75.)
Answer:
Product Lower of cost or market value
A $28
B $42
C $119
D $18
Explanation:
Particulars a b c d e f = d - c
Product Cost Replacement cost Estimated disposal cost Estimated selling price Normal profit in sales Ceiling
A $30 $28 $8 $44 25% $36
B $44 $42 $10 $54 20% $44
C $124 $119 $29 $210 30% $181
D $18 $15.4 $6 $30 20% $24
Product g = f - d × e h = middle value of b , f ,g i j = lower of I and h
Product Floor Designated market value Cost Lower of cost or market value
A $25 $28 $30 $28
B $33.2 $42 $44 $42
C $118 $119 $124 $119
D $18 $18 $18 $18
As we know that the inventory should be recognized at lower value of cost or market value and the same is considered
Mr. Etemadi has prepared the following list of statements about service companies and merchandisers. Identify each statement as true or false.
1. Measuring net income for a merchandiser is conceptually the same as for a service company.
2. For a merchandiser, sales less operating expenses is called gross profit.
3. For a merchandiser, the primary source of revenues is the sale of inventory.
4. Sales salaries and wages is an example of an operating expense.
5. The operating cycle of a merchandiser is the same as that of a service company.
Answer:
Explanation:
1. Measuring net income for a merchandiser is conceptually the same as for a service company. TRUE
2. For a merchandiser, sales less operating expenses is called gross profit.
FALSE
For a merchandiser,sales subtracted from cost of goods sold is called gross profit.
3. For a merchandiser, the primary source of revenues is the sale of inventory.
TRUE
4. Sales salaries and wages is an example of an operating expense. TRUE
5. The operating cycle of a merchandiser is the same as that of a service company.
FALSE
A perpetual inventory system continuously leeps detailed records of the cost of the each purchase and sale. It shows the inventory that should be on hand for energy item.
aspela Corp. had the same capital structure in year 7 and year 8, consisting of the following: Preferred stock, $12 par, 5% cumulative, 20,000 shares issued and outstanding $ 240,000 Common stock, $6 par, 250,000 shares issued and outstanding 1,500,000 Caspela reported net income of $600,000 for year 8. No preferred dividends were paid during year 7, but Caspela paid $20,000 in preferred dividends in year 8. In its year 8 income statement what amount should Caspela report as basic earnings per share
Answer:
$2.35 per share
Explanation:
The computation of the earning per share is shown below:
Earning per share = (Net income - preference dividend) ÷ (Number of shares outstanding)
= ($600,000 - $12,000) ÷ (250,000 shares)
= $588,000 ÷ 250,000 shares
= $2.35 per share
The preference dividend is
= $240,000 × 5%
= $12,000
We simply applied the above formula
Moto Win Auto Superstore is thinking about offering a two-year limited warranty for $978 on all new cars of a certain model. The terms of the warranty would be that Moto Win would replace the car free of charge under certain, specified conditions. Replacing the car in this way would cost MotoWin $16,300. Suppose that under the warranty, there is a 6% chance that Moto Win would have to replace the car one time and a 94% chance they wouldn't have to replace the car. If MotoWin knows that it will sell many of these warranties, should it expect to make or lose money from offering them? How much?
Answer:
they would expect to lose 58.68 dollars on each warranty visit.
Explanation:
We can use the following method to solve the given problem in the question;
Solution
Expected value for Motowin = $978*0.94 - $16300*0.06 = - $ 58.68
Hence, In the long run, they would expect to lose 58.68 dollars on each warranty visit.
We can use the following method to solve the given problem in the question;
Expected value for Motowin = $978*0.94 - $16300*0.06
Expected value for Motowin = - $ 58.68
Therefore, in the long run, they would expect to lose 58.68 dollars on each warranty visit.
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On November 1, 20Y9, Lexi Martin established an interior decorating business, Heritage Designs. During the month, Lexi completed the following transactions related to the business:
Nov.
1 Lexi transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $50,000.
1 Paid rent for period of November 1 to end of month, $4,000.
6 Purchased office equipment on account, $15,000.
8 Purchased a truck for $38,500 paying $5,000 cash and giving a note payable for the remainder.
10 Purchased supplies for cash, $1,750.
12 Received cash for job completed, $11,500.
15 Paid annual premiums on property and casualty insurance, $2,400.
23 Recorded jobs completed on account and sent invoices to customers, $22,300.
24 Received an invoice for truck expenses, to be paid in November, $1,250.
Enter the following transactions on Page 2 of the two-column journal:
Nov.
29 Paid utilities expense, $4,500.
29 Paid miscellaneous expenses, $1,000.
30 Received cash from customers on account, $9,000.
30 Paid wages of employees, $6,800.
30 Paid creditor a portion of the amount owed for equipment purchased on November 6, $3,000.
30 Paid dividends, $2,500.
Required:
1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited.
2. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
Explanation:
(1) Journalizing the Transactions:-
Heritage Designs
General Journal
For the Month of November,20Y9
Date Accounts Debit Credit
Nov. 1 Cash $50,000
Common Stock $50,000
Nov. 1 Rent Expense $4,000
Cash $4,000
Nov. 6 Office Equipment $15,000
Accounts Payable $15,000
Nov. 8 Truck $38,500
Cash $5,000
Notes Payable $33,500
Nov. 10 Supplies $1,750
Cash $1,750
Nov. 12 Cash $11,500
Fees Earned $11,500
Nov. 15 Prepaid Insurance $2,400
Cash $2,400
Nov. 23 Accounts Receivable $22,300
Fees Earned $22,300
Nov. 24 Truck Expense $1,250
Cash $1,250
Nov. 29 Utilities Expense $4,500
Cash $4,500
Nov. 29 Miscellaneous Expense $1,000
Cash $1,000
Nov. 30 Cash $9,000
Accounts Receivable $9,000
Nov. 30 Wages Expense $6,800
Cash $6,800
Nov. 30 Accounts Payable $3,000
Cash $3,000
Nov. 30 Dividends $2,500
Cash $2,500
(2) Posting the each Transaction into General Ledger:-
Cash
Date Items Debit Credit Balance
Nov. 1 Common Stock $50,000 $50,000
Nov. 1 Rent Expense $4,000 $46,000
Nov. 8 Truck $5,000 $41,000
Nov. 10 Supplies $1,750 $39,250
Nov. 12 Fees Earned $11,500 $50,750
Nov. 15 Prepaid Insurance $2,400 $48,350
Nov. 24 Truck Expense $1,250 $47,100
Nov. 29 Utilities Expense $4,500 $42,600
Nov. 29 Miscellaneous Expense $1,000 $41,600
Nov. 30 Accounts Receivable $9,000 $50,600
Nov. 30 Wages Expense $6,800 $43,800
Nov. 30 Accounts Payable $3,000 $40,800
Nov. 30 Dividends $2,500 $38,300
Accounts Receivable
Date Items Debit Credit Balance
Nov. 23 Fees Earned $22,300 $22,300
Nov. 30 Cash $9,000 $13,300
Supplies
Date Items Debit Credit Balance
Nov. 10 Cash $1,750 $1,750
Prepaid Insurance
Date Items Debit Credit Balance
Nov. 15 Cash $2,400 $2,400
Equipment
Date Items Debit Credit Balance
Nov. 6 Accounts Payable $15,000 $15,000
Truck
Date Items Debit Credit Balance
Nov. 8 Cash $5,000 $5,000
Nov. 8 Notes Payable $33,500 $38,500
Notes Payable
Date Items Debit Credit Balance
Nov. 8 Truck $33,500 $33,500
Accounts Payable
Date Items Debit Credit Balance
Nov. 6 Equipment $15,000 $15,000
Nov. 30 Cash $3,000 $12,000
Common Stock
Date Items Debit Credit Balance
Nov. 1 Cash $50,000 $50,000
Dividends
A work center uses kanban containers that hold 200 parts. To produce enough parts to fill a container, 60 minutes of setup plus run time are needed. Moving the container to the next workstation, waiting time, processing time at the next work station, and return of the empty container take 120 minutes. There is an overall demand rate of 10 units per minute. Calculate the number of containers needed for this process.
Answer:
9 containers
Explanation:
Data given
Container holds (capacity) = 200 units
Demand rate per minute = 10 units
The computation of number of containers needed is shown below:-
Time to fill container = Setup time + Processing time
= 60 + 120
= 180 minutes
Number of containers (n) = (Demand × Time to fill container) ÷ Capacity of the container
= (10 × 180) ÷ 200
= 1,800 ÷ 200
= 9 containers
Therefore for computing the number of containers we simply applied the above formula.
At the beginning of 20D, Braga Company had office supplies inventory of $800. During 20D, the company purchased office supplies amounting to $2,500 (paid for in cash and debited to office supplies inventory). At December 31, 20D, the end of the accounting year, a count of office supplies still on hand reflected $500. The adjusting entry Braga Company will record on December 31, 20D to adjust the office supplies inventory account would include a A) debit to office supplies expense for $2,800. B) debit to office supplies inventory for $2,800. C) debit to supplies expense for $2,500. D) credit to office supplies inventory for $500.
Answer:
A) debit to office supplies expense for $2,800
Explanation:
When Supplies is purchased, Debit supplies and credit Cash/Accounts payable. As Supplies are used up, debit supplies expense (with the amount used) and Credit Supplies account.
The movement in the balance of supplies at the start and end of a period is as a result of usage and purchases. While usage reduces the balance in supplies, purchases increases the balance. This may be expressed mathematically as
Opening balance + purchases - units used = closing balance
Hence,
$800 + $2500 - amount used = $500
amount used up = $800 + $2500 - $500
= $2800
An outside supplier has offered to provide the annual requirement of 7,200 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
Super corporation produces a part in the manufactures of its product. The unit cost is $21 computed as follows:
An outside supplier has offered to provide the annual requirement of 7,200 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
$
Direct material 6
Direct labour 8
Variable manufacturing overhead 2
Fixed manufacturing overhead 5
Total cost 21
Answer:
Total financial advantage of buying from the supplier $43,200
Explanation:
Unit relevant variable cost of making= 6+8 +2 = 16
$
Variable cost of making ( 16× 7200) = 115,200
Variable of buying (13 ×7200) 93,600
Savings in variable cost 21,600
Savings in fixed cost (60%*72300 × 5) 21600
Total savings from buying 43,200
Total financial advantage of buying from the supplier $43,200
Assume there is a decrease in the market demand for a good sold by price-taking firms that are initially producing the profit-maximizing level of output. How will the market adjust over time? Firms will exit the market, causing price to fall until positive profits are eliminated. Firms will exit the market, causing price to rise until losses are eliminated. Firms will enter the market, causing price to rise until losses are eliminated. Firms will enter the market, causing price to fall until positive profits are eliminated.
Answer: Firms will exit the market, causing price to rise until losses are eliminated
Explanation:
When there is a decrease in demand in a Perfectly Competitive Market, firms will have to start producing at a lower Quantity to manage their Marginal cost. This leads to Economic losses on their part in the short run.
In the long run however, should the situation remain the same, the new price would be less than their Average Cost which would deepen Economic losses. Firms would respond by exiting the market in the long run.
As the firms exit, the supply curve shifts left as supply drops. This drop in supply leads to a price rise. The exits will continue until enough firms leave that the market's remaining firms will stop suffering economic losses.
A strategic business unit (SBU) refers to:_________.
a. a single product or service identification code used to identify items for strategic marketing planning purposes.
b. a small number of people from different departments in an organization who are mutually accountable to accomplish a task or common set of performance goals.
c. a strategic product that has a unique brand, size, or price. a privately-owned franchise under the auspices of a larger group or organization bearing the same name.
d. a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers.
Answer:
D.
Explanation:
Strategic Business unit is also popularly known as SBU. It is an independent entity of a large company. This entity have its own aims and visions, and operates individually but report its working to the headquarter. The aim of this entity is target market.
An example of SBU is Samsung. The company have different categories of product under one name. It is an electron company that makes phones, televisions, refrigators, camera, etc. All these sub-categories or divison of Samsung are SBU.
From the given options the correct one is D.
Suppose that SoS sells both versions and wants to charge different prices for different versions. What is the highest price of the bluetooth version for the high-valuation buyers? (Hint: Since low-valuation buyers will not have an incentive to buy the more expensive version, the highest price of the stripped-down version for the low-valuation buyers is equal to their willingness to pay, i.e., pL = $250)
Answer:
Check the explanation
Explanation:
Since the high valuation customers are willing to pay $500 for the Bluetooth headphones, that price should be set for the Bluetooth versions. The problem will arise if the high valuation customers shift to the stripped down version as well. However, since they care for the Bluetooth versions and stripped down versions separately, it is highly likely that they will prefer the Bluetooth headphones.
So the highest price that can be set for the Bluetooth headphones for the high value buyer will be $500.
5) If the price is set at $500 for high value customers and $250 for low value customers, total profit can be given as
Profit = 1,000,000 * (250 - 100) + 800,000 * (500 - 100)
Profit = 150,000,000 + 320,000,000 = $470 million
Movers Company manufactures sneakers. Production of its new sneakers for the coming three months is budgeted as follows: August 28,000 September 50,000 October 33,000 Each sneaker requires 2.5 hours of direct labor time. Direct labor wages average $16 per hour. Monthly variable overhead averages $10 per direct labor hour plus fixed overhead of $4,500. What is the total overhead budgeted for the month of September
Answer:
Budgeted overhead cost =$1,250,000
Explanation:
Budgeted overhead for the month of September = Total labour hours × overhead rate per hour
Total labor hours = standard hours × budgeted production units
=2.5 hours × 40,000= 125,000
Budgeted overhead cost Total = $10× 125,000 =$1250000
Budgeted overhead cost =$1,250,000
Answer:
$1,254,500
Explanation:
Solution
Recall that:
Production of sneakers for three months budgets were :
August= 28000
September = 50,000
October = 33,000
Each sneakers requires labor time = 2.5 hours
Labor wages average = $16.
Now,
The total overhead budgeted for the month of September is calculated as follows:
The total overhead budgeted for the month of September = Variable overhead + Fixed overhead
= (50,000 units * 2.5 direct labor hours per unit * $10 per direct labor hour) + $4,500
= $1,254,500
Therefore, the total overhead budgeted for the month of September is $1,254,500
Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot. The discount is legally sufficient consideration
a. because it is a promise of something of value.
b. only if Tasty uses it.
c. only if Sports Bar adds a cash rebate.
d. under no circumstances.
Answer:
The correct answer is the option A: because it is a promise of something of value.
Explanation:
To begin with, in order to understand that the discount is legally sufficient consideration it is necessary to understand that it is due to the fact that what the company is offering is something of value for them, therefore that they decide to offer it to the other business in order to make an agreement according to the situation that they are both in. Moreover, that promise is consider to be legitim in court if it was stated in a written way in where both parties agree to the terms of use.
The following information was drawn from the Year 1 accounting records of Ozark Merchandisers:
a. Inventory that had cost $17,400 was sold for $31,320 under terms 2/20, net/30.
b. Customers returned merchandise to Ozark five days after the purchase.
c. The merchandise had been sold for a price of $784.
d. The merchandise had cost Ozark $560.
e. All customers paid their accounts within the discount period.
f. Selling and administrative expenses amounted to $3,132.
g. Interest expense paid amounted to $240.
h. Land that had cost $6,400 was sold for $8,640 cash.
Required:
1. Determine the amount of net sales.
2. Prepare a multistep income statement.
Answer and Explanation:
1. The computation of net sales is shown below:-
Net sales = Gross Sales - Sales Returns - Sales Discounts
= $31,320 - $784 - ($$31,320 - $784) × 2%)
= $31,320 - $784 - $610.72
= $29,925.28
2. The preparation of multistep income statement is shown below:-
Income Statement
Net sales revenue $29,925.28
Cost of Goods Sold $16,840
($17,400 - $560)
Gross Profit $13,085.28
Selling and Administrative
Expenses $3,132
Income from Operations $9,953.28
Other Income / Expense
Gain on sale of land $2,240
($8,640 - $6,400)
Interest Expense $240 $2,000
Net income $11,953.28
One could argue correctly that:
a. all firms in any industry can earn short-run but not necessarily long-run positive economic profit.
b. all firms in any industry can earn long-run but not necessarily short-run positive economic profit.
c. all firms in any industry can earn both short-run and long-run positive economic profit.
d. no firm in any industry can earn a long-run positive economic profit because all price changes made by any firm will be followed by all of the other firms.
e. all firms in any industry can earn a short-run positive profit if economies of scale exist.
Answer:
a. all firms in any industry can earn short-run but not necessarily long-run positive economic profit.
Explanation:
A firm economic profit if its accounting profit is greater than opportunity cost.
A firm earns accounting profit if its total revenue is greater than its total explicit cost.
A monopoly and oligopoly can earn positive economic profit in the short and long run because the industries have high barriers to entry and exit of firms.
On the other hand, a perfect competitive industry can earn only economic profit in the short run. Because of low barriers to entry of firms, if a firm is earning economic profit, in the long run new firms would enter into the industry and drive economic profit to zero.
I hope my answer helps you
Alex Company prepares its statement of cash flows using the direct method for operating activities. For the year ended December 31, 2018, Alex Company reports the following activity: Sales on account $2,100,000 Cash sales 1,110,000 Decrease in accounts receivable 915,000 Increase in accounts payable 108,000 Increase in inventory 72,000 Cost of good sold 1,575,000 What is the amount of cash collections from customers reported by Alex Company for the year ended December 31, 2018
Answer:
The amount of cash collections from customers reported by Alex company for the year ended December 31, 2018 is $4,125,000.
Explanation:
Cash collection refers to the collection of cash from from an individual or a business whom invoice has been issued to. Any invoice unpaid are noted as being outstanding.
Cash collection fomular is therefore;
Cash collection = Sales on account + Cash sales + Decrease in accounts receivable
=$2,100,000 +$1,110,000 + $915,000
=$4,125,000
You are the CEO and Manager of MathFair (a Math based theme park, obviously) that charges: children $2, adults $5, and vets $3. You are looking over the books for last weekend. 1,900 people came to the park. You took in $6,300. There were 100 unaccompanied children (that is, the number of children was 100 more than the number of adults and vets combined). How many children, adults, and vets visited Math Fair last weekend
Answer:
700 adults
800 children
400 vets
Explanation:
children $2
adults $5
vets $3
1,900 came to the park, total revenue = $6,300
number of children was 100 more than adults
Let:
C = number of children
A = number of adults
V = number of vets
2C + 5A + 3V = 6,300
C + A + V = 1,900
C = A + 100 (we can replace C with A)
2(A + 100) + 5A + 3V = 6,300 ⇒ 2A + 200 + 5A + 3V = 6,300
7A + 3V = 6,100
A + 100 + A + V = 1,900 ⇒ 2A + V + 100 = 1,900
2A + V = 1,800
7A + 3V = 6,100
2A + V = 1,800 ⇒ V = 1,800 - 2A (we can replace V)
7A + 3 (1,800 - 2A) = 6,100
7A + 5,400 - 6A = 6,100
A = 6,100 - 5,400 = 700
C = A + 100 = 800
V = 1,900 - 700 - 800 = 400
The following data has been collected about Keller Company's stockholders' equity accounts: Common stock $10 par value 18,000 shares authorized and 9,000 shares issued, 2,200 shares outstanding $90,000 Paid-in capital in excess of par value, common stock 48,000 Retained earnings 23,000 Treasury stock 24,860 Assuming the treasury shares were all purchased at the same price, the number of shares of treasury stock is: Multiple Choice 6,800. 90,000. 23,000. 48,000. 18,000.
Answer:
The multiple choices are:
6,800.
23,000.
10.
90,000.
48,000.
The correct option is the first one,6,800 shares
Explanation:
The treasury stocks are stocks repurchased from investors by the company.The treasury stocks were repurchased through a process known share buyback,in other words,the company buying back its own shares from stockholders.
The formula for number of treasury stock=shares issued- shares outstanding
9,000 shares have been issued thus far
shares outstanding out of the 9,000 shares issued are 2,200
number of treasury stock =9,000-2,200=6,800
After a retiring from a successful business career, you would like to make a donation to your university. This donation will go into the school’s endowment pool and the returns generated from the donation will support the salary of a new professor in the business school on a perpetual basis. The university expects to earn returns of 5.5% on its endowment pool. You may assume that any distributions to support the salary will be made annually.
Part A) You can make a donation today (t=0) in the amount of $2,500,000. The first cash flow distribution from your donation to cover the professor's salary will take place in one year (at t=1). Which of the following is closest to the annual salary payment that can be made as a result of your donation?
A. $2,500,000
B. $454,545
C. $100,000
D. $137,500
Part B) After further discussions, the university determines that the employment agreement with the new professor will call for annual salary increases of 2%. Given this new requirement, and assuming the first salary distribution will still occur one year from today, what is the starting salary (at t=1) that can be supported with your $2,500,000 donation?
A. $50,000
B. $187,500
C. $140,250
D. $87,500
Answer:
Part A) D. $137,500
Part B) C. $140,250
Explanation:
Part A) The computation of annual salary payment is shown below:-
Annual salary = Donation made × Interest rate
= $2,500,000 × 5.5%
= $137,500
So, for computing the annual salary we simply multiply the donation made with interest rate.
Part B) The computation of starting salary is shown below:-
Starting salary = Annual salary + Increased annual salary
= $137,500 + 2%
= $140,250
Therefore for computing the starting salary we simply added the annual salary with increased annual salary.
Charlotte owns a custom publishing business. She uses 500 square feet of her home (2,000 square feet) as an office and for storage. All her business has come from telemarketing (telephone sales), direct mailings, or referrals. In her first year of operation, she has revenues of $37,000, cost of goods sold of $25,900, and other business expenses of $8,100. The total expenses related to her home are:
Answer:
As calculated below (attachment)She must deduct the expenses related to interest and taxes first, then deduct her other business expenses, then at last the depreciation.She may carry forward the $1,105 ($145 limit- $1,250 current depreciation) which she is not ble to use in the current year to a future year when her business has sufficient income to absorb the deduction.
Explanation:
[10 points] Suppose Wilwaukee Telecom offers its users the option of paying either (a) $2.00 per minute for telephone service or (b) a $125 flat charge for a year of unlimited toll-free calls. Consider a customer with an annual demand for telephone service of P = 11 – 0.1Q, where P is the price per minute and Q is the number of minutes of calls made per year. Calculate the consumer surplus for each of the plans (a) and (b).
Answer:
For plan A, P = 2.
Then from demand curve, 2 = 11-.1Q
So .1Q = 9
Q* = 90
B) under plan b, P = zero
So make 11 = .1Q
Q* = 110
Now Consumer surplus from a)
CS = .5*(11-2)*90 = ∆ABC
= .5*9*90 = 405
From b)
CS = .5*11*110 - 125 = ∆ ADE - fixed fee
= 605-125 = 480
You will be meeting with HP employees to work with them to identify their company resources that are valuable (V), rare (R), and costly to imitate (I) as well as how they are organized (O) to capture the value of the resources. Which of the following could you do in order to capture this information?Check all that apply:A) have a discussion with HP's upper management. B) research patents submitted by HP's product development engineers. C) send a survey to HP employees. D) eat lunch In the cafeteria at HP's headquarters to explore their organic food options.
Answer:
The correct answers are the options A, B and C.
Explanation:
To begin with, if what the person is looking for is to gather information about the company HP, and more especifically about their resources, there are several actions that he can do in order to get all that information. For start, he can have an interview with the upper management in order to ask questions and obtain the preliminary answers to the information he is looking for and later use that info to make a survey good enough to gather more. Once all that is gathered together, what the person can do is to reasearch patents submitted by the company's engineers so in that way he might still increase the amount of info.
Indicate whether each of the following is either True/Fasle:
1. An S Corporation is a taxpaying entity.
2. If shareholders elect S Corporation status, the corporation generally pays no tax.
3. Stock received by a transferor in exchange for services does not count in determining whether the 80% control test has been met.
4. Under Sec. 351, no gain or loss is recognized by those who exchange property solely for stock of the recipient corporation.
5. When boot is received by a taxpayer transferring assets in a Sec. 351 exchange, gain must be recognized to the extent of the smaller of the realized gain or the FMV of the boot received.
Answer:
The following are the answers,
False - S organization could be a taste unit which suggests all the financial gain of the S company are going to be relocated to stockholders and also the tax is to be compensated by the stockholders and not the S organization. True – As per constant rationalization on top of you'll be able to settle this. False – Stock acknowledged on either methodology are going to be enclosed for control purpose. True – The profit or loss is merely predictable once the transmission isn't for sole perseverance. True - When boot is acknowledged by a remunerator shifting possessions in a very Sec. 351 discussion, gain should be documented to the level of the lesser of the complete expansion
Last year Ann Arbor Corp had $250,000 of assets (which equals total invested capital), $305,000 of sales, $20,000 of net income, and a debt-to-total-capital ratio of 37.5%. The new CFO believes that a new computer program will enable the company to reduce costs and thus raise net income to $33,000. The firm finances using only debt and common equity. Assets, total invested capital, sales, and the debt to capital ratio would not be affected. By how much would the cost reduction improve the ROE
Answer:
8.32%
Explanation:
The computation of cost reduction improve the ROE is shown below:-
For computing the increase in ROE first we need to follow some steps which is here below:-
Debt = capital × Debt
= $250,000 × 37.5%
= $93,750
Equity = Assets - Debt
= $250,000 - $93,750
= $156,250
New ROE = New Net income ÷ Equity
= $33,000 ÷ $156,250
= 21.12%
Old ROE = Old Net income ÷ Equity
= $20,000 ÷ $156,250
= 12.8%
Increase in ROE = New ROE- Old ROE
= 21.12% - 12.8%
= 8.32%