Answer:
A. $ 870,000
B. $52,200
C. $823,800
Explanation:
a. Computation for acquisition cost.
Using this formula
Acquistion cost= 800,000 +70,000
Acquistion cost=$ 870,000
2. Computation for depletion
Depletion for 2020=
(870,000/1,000,000)*60,000
Depletion for 2020=0.87*60,000
Depletion for 2020= $52,200
3. Computation for the net book value
Net book value =$870,000 -$52,200 +$6,000
Net book value=$823,800
Sara purchased a life insurance policy as an investment from her neighbor, Angela. Angela, the original policy holder had paid premiums of $12,000 before the sale. Sara paid Angela $16,500 to acquire the life insurance policy. Sara made additional payments of $5,000. When Angela died, Sara collected $50,000. How much of the policy proceeds is taxable to Sara
Answer:
$16,500
Explanation:
She invested = $12,000
Total money spent to acquire the policy = ($16,500 + $5000) = $21,500
Total money invested on policy = $21500 + $12000
Total money invested on policy = $33500
Money that sara got after angela died = $50,000
Therefore, the taxable proceed will be = $50,000 - $33,500 = $16,500
Post the journal entries to the T-accounts, using transaction dates as posting references in the ledger accounts.
Jul.
1. Yardley contributed $68,000 cash to the business in exchange for common stock.
5. Paid monthly rent on medical equipment, $510.
9. Paid $16,000 cash to purchase land to be used in operations.
10. Purchased office supplies on account, $1 ,600.
19. Borrowed $26,000 from the bank for business use.
22. Paid $1 , 100 on account.
28. The business received a bill for advertising in the daily newspaper to be paid in August, $250.
31. Revenues earned during the month included $6,300 cash and $5,300 on account.
31. Paid employees' salaries $1 ,900, office rent $1 ,400, and utilities $600. Record as a compound entry.
31. The business received $1 ,340 for medical screening services to be performed next month.
31. Paid cash dividends of $6,900.
Answer:
July 1. Yardley contributed $68,000 cash to the business in exchange for common stock.
Dr cash 68,000
Cr common stock 68,000
July 5. Paid monthly rent on medical equipment, $510.
Dr rent expense 510
Cr cash 510
July 9. Paid $16,000 cash to purchase land to be used in operations.
Dr land 16,000
Cr cash 16,000
July 10. Purchased office supplies on account, $1 ,600.
Dr office supplies 1,600
Cr accounts payable 1,600
July 19. Borrowed $26,000 from the bank for business use.
Dr cash 26,000
Cr notes payable 26,000
July 22. Paid $1,100 on account.
Dr accounts payable 1,100
Cr cash 1,100
July 28. The business received a bill for advertising in the daily newspaper to be paid in August, $250.
Dr advertising expense 250
Cr accounts payable 250
July 31. Revenues earned during the month included $6,300 cash and $5,300 on account.
Dr cash 6,300
Dr accounts receivable 5,300
Cr service revenue 11,600
July 31. Paid employees' salaries $1 ,900, office rent $1 ,400, and utilities $600. Record as a compound entry.
Dr wages expense 1,900
Dr rent expense 1,400
Dr utilities expense 600
Cr cash 3,900
July 31. The business received $1 ,340 for medical screening services to be performed next month.
Dr cash 1,340
Cr unearned revenue 1,340
July 31. Paid cash dividends of $6,900.
Dr dividends 6,900
Cr cash 6,900
cash
debit credit
July 1 68,000
July 5 510
July 9 16,000
July 19 26,000
July 22 1,100
July 31 6,300
July 31 3,900
July 31 1,340
July 31 6,900
101,640
accounts receivable
debit credit
July 31 5,300
office supplies
debit credit
July 10 1,600
land
debit credit
July 9 16,000
accounts payable
debit credit
July 10 1,600
July 22 1,100
July 28 250
750
unearned revenue
debit credit
July 31 1,340
notes payable
debit credit
July 19 26,000
common stock
debit credit
July 1 68,000
service revenue
debit credit
July 31 11,600
rent expense
debit credit
July 5 510
July 31 1,400
advertising expense
debit credit
July 28 250
wages expense
debit credit
July 31 1,900
utilities expense
debit credit
July 31 600
dividends
debit credit
July 31 6,900
In 2013, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures:
Basic research to develop the technology $ 2,000,000
Engineering design work 680,000
Development of a prototype device 300,000
Acquisition of equipment 60,000
Testing and modification of the prototype 200,000
Legal and other fees for patent application on the new
communication system 40,000
Legal fees for successful defense of the new patent 20,000
Total $ 3,300,000
The equipment will be used on this and other research projects. Depreciation on the equipment for 2013 is $10,000.
During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized.
Required:
Prepare correcting entries that reflect the appropriate treatment of the expenditures.
1. Record the correcting entry to expense R&D costs incorrectly capitalized
2. Record the correcting entry to capitalize the cost of equipment incorrectly capitalized as a patent.
3. Record the correcting entry to record depreciation on equipment used in R&D projects.
Answer:
1. Dec 31
Dr Research and Development Expense $3,180,000
Cr 2013 Patent $3,180,000
2. Dec 31
Dr Equipment $60,000
Cr 2013 Patent $60,000
3. Dec 31
Dr Research and Development Expense $10,000
Cr 2013 Accumulated Depreciation - Equipment $10,000
Explanation:
1. Preparation of the Journal entry to Record the correcting entry to expense
Dec 31
Dr Research and Development Expense $3,180,000
Cr 2013 Patent $3,180,000
(Being To record research and development expense )
Calculation for the Total amount of theresearch and development expense
Basic research to develop the technology $2,000,000
Engineering design work $680,000
Development of a prototype device $300,000
Testing and modification of the prototype $200,000
TOTAL research and development expense $3,180,000
2. Preparation of the journal entry to Record the correcting entry to capitalize the cost of equipment
Dec 31
Dr Equipment $60,000
Cr 2013 Patent $60,000
(Being To correct cost of equipment capitalized to patent)
3. Preparation of the Journal entry to Record the correcting entry to record depreciation on equipment
Dec 31
Dr Research and Development Expense $10,000
Cr 2013 Accumulated Depreciation - Equipment $10,000
(Being To record research and development expens
There are two machines for sale that you are considering purchasing for your sawmill to produce hardwood flooring. You want to find the one that has a higher process capability index, or Cpk. The goal is to produce flooring that is between 46 and 50 millimeters thick. The first machine is more accurate on average, producing to a mean of 48 millimeters...but unfortunately it has more variation with a standard deviation of 7 millimeters. The second machine is not as accurate, with a mean of 47mm, but does deliver a more consistent output, with standard deviation of 3mm.
[ Select] What is the Cpk of machine 1?
[Select] What is the Cpk of machine 2?
[ Select] If your goal is to be capable', what would you do?
[ Select] If (somehow) you could combine the best of both machines (the centering or average of machine 1 coupled with the constancy or standard deviation of machine 2, what would the Cpk be?
Answer:
Machine 1 = 0.092
Machine 2 = 0.111
Combined = 0.222
Explanation:
Given the following :
Lower specification limit (LSL) = 46 mm
Upper specification limit (USL) = 50 mm
MACHINE 1:
Mean 1 (m1) = 48
Standard deviation 1 (σ1) = 0.7
MACHINE 2:
Mean 2 (m2) = 47
Standard deviation 2 (σ2) = 0.3
Cpk formula:
Min(USLcpk, LSLcpk)
USLcpk = (USL - m) / 3σ
LSLcpk = (m - LSL) / 3σ
FOR MACHINE 1:
USLcpk = (50 - 48) / 3(7) = 0.0952
LSLcpk = (48 - 46) / 3(7) = 0.0952
Cpk = Min(0.952, 0.952) = 0.952
FOR MACHINE 2:
USLcpk = (50 - 47) / 3(3) = 0.333
LSLcpk = (47 - 46) / 3(3) = 0.111
Min(USLcpk, LSLcpk)
Cpk = Min(0.333, 0.111) = 0.111
When combined :
Mean = 48
σ = 3
USLcpk = (50 - 48) / 3(3) = 0.222
LSLcpk = (48 - 46) / 3(3) = 0.222
Min(USLcpk, LSLcpk)
Cpk = Min(0.222, 0.222) = 0.222
Daily demand for a certain product is normally distributed with a mean of 138 and a standard deviation of 13. The supplier is reliable and maintains a constant lead time of 7 days. The cost of placing an order is $17 and the cost of holding inventory is $0.40 per unit per year. There are no stock-out costs, and unfilled orders are filled as soon as the order arrives. Assume sales occur over 358 days of the year.
Your goal here is to find the order quantity and reorder point to satisfy a 73 percent probability of not stocking out during the lead time.
a. To manage inventory, the company is using
Continuous review system
Periodic review system
b. Find the order quantity. (Round your answer to the nearest whole number.)
Order quantity books
c. Find the reorder point. (Use Excel's NORMSINV() function to find the correct critical value for the given α-level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)
Reorder point
Answer:
A. Continuous review system
B. Order quantity = 2,049 Books
C. Reorder point=987
Explanation:
a. In order To manage inventory, the company is using what is called Continuous review system
b. Calculation to find the order quality
Using this formula
Order quantity = √((2DS)/H)
Let plug in the morning
Order quantity=√ ((2 x 49,404 x 17)/0.40)
Order quantity = 2,049 Books
(138*358=49,404)
C. Calculation for reorder point
First step is to find the σL
73 % S.L. - z = 0.613
Using this formula to find the σL
σL = (Lσ^2)
Let plug in the formula
σL=√(7(13)^2)
σL= 34.39
Second step is to find the Reorder point using this formula
R = d bar(L) + zσL
Let plug in the formula
Reorder point = (138)(7) + 0.613(34.39)
Reorder point = 966+21
Reorder point=987
On September 1, Boylan Office Supply had an inventory of 30 calculators at a cost of $18 each. The company uses a perpetual inventory system. During September, the following transactions occurred.
Sept. 6 Purchased with cash 80 calculators at $20 each from Guthrie Co.
Sept. 9 Paid freight of $80 on calculators purchased from Guthrie Co.
Sept. 10 Returned 3 calculators to Guthrie Co. for $63 cash (including freight) because they did not meet specifications.
Sept. 12 Sold 26 calculators costing $21 (including freight) for $31 each on account to Lee Book Store, terms n/30.
Sept. 14 Granted credit of $31 to Lee Book Store for the return of one calculator that was not ordered.
Sept. 20 Sold 30 calculators costing $21 for $32 each on account to Orr's Card Shop, terms n/30.
Journalize the September transactions.
Answer and Explanation:
The journal entries are shown below:
Inventory $1,600 (80 × $20)
To Accounts Payable $1,600
(Being inventory purchased on account)
Inventory $80
To Cash $80
(Being the freight charges is paid)
Accounts Payable $63
To Inventory $63
(being returned inventory is recorded
Accounts Receivable $806 (26 × $31)
To Sales Revenue $806
(Being sale of calculators on account is recorded)
Cost of Goods Sold $546 (26 × $21)
To Inventory $546
(being cost of calculators sold is recorded)
Sales Returns and Allowances $31
To Accounts Receivable $31
(Being return of calculator that is recorded)
Inventory $31
Cost of Goods Sold $31
(Being cost of calculators returned is recorded)
Accounts Receivable $960 (30 × $32)
To Sales Revenue $960
(Being sale of calculators on account is recorded)
Cost of Goods Sold $630 (30 × $21 )
To Inventory $630
(Being cost of calculators sold is recorded)
Which action taken by a central bank would reflect expansionary monetary policy?
The action taken by a central bank which would reflect the expansionary monetary policy is the sale of treasury securities to banks and the lowering down of reserve requirements.
Options A and C are correct.
What is a central bank?A central bank is referring to the largest bank that controls the regional and subordinate banks. It is the bank in which the commercial banks keep the needed reserve ratio. There are various policies being made by the central bank to monitor the monetary system like fiscal policy, monetary policy, economic policy, etc.
The central bank of the US country is the Federal Reserve that applied the expansionary monetary policy. The three ways that are made by Federal Reserve in respect of this policy are by making the discount rates to be fallen down for every bank, by acquiring the securities being sold by the government in the market and by keeping the reserve ratio to the lowest so that commercial banks can easily maintain them.
Therefore, the explanations written in option A and C are correct.
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Question's missing part:
The options are given as follows:
A) Selling treasury securities to banks to reduce the money supply
B) Raising the discount rate to provide less in loans to banks
C) Lowering the reserve requirements for all banks
D) Raising the interest that it pays to banks on the balance of their
reserves
Explain how allocating the profits evenly between the partners would work. Consider the fairness to each of the partners in your response.
Answer and Explanation:
Allocation of profit to partners is all dependent on partnership agreement also called partnership deed where sharing ratio as well as role and participation of partners are stated clearly. The sharing ratio states how profits or losses in the partnership is shared amongst partners. If there is ratio to share profit equally or higher and lower for certain partners, it is made and stated clear in partnership deed before business commences, this ensures there is fairness in partners' dealings and everyone gets his share according to agreement
Use the information about Billy's Burgers to answer the following question(s):
Billy's Burgers
Figures in $ millions
Income Statement 2010 Balance Sheet 2010
Net Sales 246.0 Assets
Costs exc. Dep. 187.0 Cash 8.0
EBITDA 59.0 Accts. Rec. 21.0
Depreciation 17.2 Inventories 23.0
EBIT 41.8 Total Current Assets 52.0
Interest 12.0 Net PP&E 145.0
Pretax Income 29.8 Total Assets 197.0
Taxes 10.4
Net Income 19.4 Liabilities and Equity Accts.
Payable 18.0 LongTerm Debt 82.0
Total Liabilities 100.0 Total Stockholders' Equity 97.0
Total Liabilities and Equity 197.0
Required:
Using the percent of sales method, and assuming 20% growth in sales, estimate Billy's Burgers' Accounts Receivable for 2011.
a. $21.0 million
b. $18.0 million
c. $25.2 million
d. $21.6 million
Answer:
c. $25.2 million
Explanation:
Billy's Burgers' Accounts receivable 2011 = Accounts receivable 2010 *(1+Growth rate)
Billy's Burgers' Accounts receivable 2011 = $21,000,000 * (1+0.20)
Billy's Burgers' Accounts receivable 2011 = $21,000,000 * (1.20)
Billy's Burgers' Accounts receivable 2011 = $25,200,000.
how can you use information about a person's values to help you relate more effectively to him or her."
Answer: bec if you know the person’s values your are able to better communicate with them because you know their likes and dislikes you have had the chance and opportunity to get to know them and that can help you achieve your goal.
Explanation:
If you know the person’s values you are able to better communicate with them because you know their likes and dislikes you have had the chance and opportunity to get to know them and that can help you achieve your goal.
what is the quality definition of Verbal exchange?
1a: a system by way of which facts are exchanged between people thru a common device of symbols, signs, and symptoms, or behavior the function of pheromones in insect verbal exchange also: alternate of data. b: private rapport is a loss of communication between old and young people.
Why is verbal exchange crucial?Top verbal exchange abilities are vital to allow others and yourself to understand facts extra correctly and fast. In contrast, terrible conversation abilities cause frequent misunderstandings and frustration.
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Pitt Enterprises manufactures jeans. All materials are introduced at the beginning of the manufacturing process in the Cutting Department. Conversion costs are incurred uniformly throughout the manufacturing process. As the cutting of material is completed, the pieces are immediately transferred to the Sewing Department. Information for the Cutting Department for the month of May follows.
Work in Process, May 1 (54,000 units, 100% complete for direct materials, 35% complete with respect to conversion costs; includes $78,500 of direct material cost; $42,050 of conversion costs).
Units started in May 233,000
Units completed in May 208,000
Work in Process, May 31 (79,000 units, 100% complete for direct materials; 15% complete for conversion costs).
Costs incurred in May
Direct materials $391,440
Conversion costs $401,900
Required:
If Pitt Enterprises uses the FIFO method of process costing, compute the cost per equivalent unit for direct materials and conversion costs respectively for May.
Answer:
cost per equivalent unit : materials = $1.37 and conversion costs = $1.78.
Explanation:
Please note that we have to use FIFO costing method
Calculation of the Equivalent Units of Production with respect to Materials and Conversion Costs
1. Raw Materials
To finish Beginning Work In Process (54,000 × 0%) 0
Started and Completed ((233,000 - 54,000) × 100%) 179,000
Ending Work In Process (79,000 × 100%) 79,000
Equivalent Units of Production with respect to Materials 258,000
1. Conversion Cost
To finish Beginning Work In Process (54,000 × 65%) 35,100
Started and Completed ((233,000 - 54,000) × 100%) 179,000
Ending Work In Process (79,000 × 15%) 11,850
Equivalent Units of Production with respect to Conversion 225,950
Calculation of the cost per equivalent unit for direct materials and conversion costs.
Unit Cost = Current Period Costs ÷ Equivalent units of production
1. Raw Materials
Unit Cost = $391,440 ÷ 258,000
= $1.37
2. Conversion Cost
Unit Cost = $401,900 ÷ 225,950
= $1.78
Townsend Industries Inc. manufactures recreational vehicles. Townsend uses a job order cost system. The time tickets from November jobs are summarized as follows:
Job 201 $4,280
Job 202 2,140
Job 203 1,690
Job 204 3,140
Factory supervision 1,460 Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $22 per direct labor hour. The direct labor rate is $15 per hour. If required, round final answers to the nearest dollar.
Required:
a. Journalize the entry to record the factory labor costs.
b. Journalize the entry to apply factory overhead to production for November.
Answer:
Part a.
Work In Process : Job 201 $64,200 (debit)
Work In Process : Job 202 $32,100 (debit)
Work In Process : Job 203 $25,350 (debit)
Work In Process : Job 204 $47,100 (debit)
Salaries Payable $168,750 (credit)
Part b.
Work In Process : Job 201 $94,160 (debit)
Work In Process : Job 202 $47,080 (debit)
Work In Process : Job 203 $37,180 (debit)
Work In Process : Job 204 $69,080 (debit)
Overheads $168,750 (credit)
Explanation:
Calculation of Labor Cost :
Job 201 = 4,280 hours × $15 = $64,200
Job 202 = 2,140 hours × $15 = $32,100
Job 203 = 1,690 hours × $15 = $25,350
Job 204 = 3,140 hours × $15 = $47,100
Application of overhead to jobs :
Job 201 = 4,280 hours × $22 = $94,160
Job 202 = 2,140 hours × $22 = $47,080
Job 203 = 1,690 hours × $22 = $37,180
Job 204 = 3,140 hours × $22 = $69,080
A department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of July, there was no beginning work in process; 39000 units were completed and transferred out; and there were 19000 units in the ending work in process that were 30% complete. During July, $87000 materials costs and $89400 conversion costs were charged to the department. The unit production costs for materials and conversion costs for July were:_________
Materials Conversion Costs
$2.77 $1.55
$2.04 $1.50
$3.09 $2.27
$1.60 $1.50
Answer:
Unit Production Cost for Materials = $1.5 per unit
Unit Production Cost for Conversion cost = $2 per unit
Explanation:
Materials Conversion
Beginning WIP 0 0
Started and Completed 39,000 39,000
Ending WIP (19,000*30%) 19,000 5,700
Equivalent Units 58,000 44,700
Cost Incurred $87,000 $89,400
Unit Production Cost for Materials = Cost / Equivalent units
Unit Production Cost for Materials = $87,000 / 58,000
Unit Production Cost for Materials = $1.5 per unit
Unit Production Cost for Conversion cost = Cost / Equivalent units
Unit Production Cost for Conversion cost = $89,400 / 44,700
Unit Production Cost for Conversion cost = $2 per unit
You first look at the trial balance. In addition to the account balances reported in the income statement, the ledger contains these selected balances at March 31, 2022. Supplies $4,600 Prepaid Insurance 7,500 Notes Payable 21,000 You then make inquiries and discover the following.
1. Rent revenue includes advanced rentals for summer-month occupancy, $21,500.
2. There were $530 of supplies on hand at March 31.
3. Prepaid insurance resulted from the payment of a 1-year policy on January 1, 2022.
4. The mail on April 1, 2022, brought the following bills: advertising for week of March 24, $150; repairs made March 10, $1,050; and utilities $200.
5. Wage expense totals $270 per day. At March 31, 3 days’ wages have been incurred but not paid.
6. The note payable is a 3-month, 8% note dated January 1, 2022.
Answer:
rent revenue 21,500 debit
unearned revenue 21,500 credit
--to amend incorrect recognition of revenue--
Supplies expense 4,070 debit
Supplies 4,070 credit
--to record use of supplies--
Insurance expense 1,875 debit
Prepaid Insurance 1,875 credit
--to record use of supplies--
advertizing expense 150 debit
repair expense 1050 debit
utilities expense 200 debit
account payable 1,400 credit
--to record accrued expenses--
wages expense 810 debit
wages payable 810 credit
--to record accrued wages--
interest expense 420 debit
interest payable 420 credit
--to record accrued interest--
Explanation:
#1 unearned revenue
The company should not recognize the summer-month occupancy as this occurs between April and June thereofre it is unearned The company has an obligation to perform. To give the rental space thus it is a liability not earnings.
#2 Supplies adjustment:
Jan 1st $4,600 - March 31st $530 = $4,070 supplies expense
#3 expired insurance:
value per month: $7,500 / 12 months = 625
month expired between Jan 1st and March 31st: 3
total value f expired insurance: $625 per month x 3 month = 1,875
#4 accured expenses concetps were incurred and we most recognize them
#5 each day $270 times 3 days accrued = 810 total wages accrued
#6 accrued interest expense: principal x rate x time
$21,000 x 0.08 x 3/12 = $420
Tommy is from a small town and quit high school to get married. He and his wife have five kids, and his wife stays home with the children. Tommy is a hard worker and strives to provide for his family, although his skills are limited. Tommy has been a butcher for his entire career. He has been with his present company, a large retail grocer, for the past six years performing the same job. There are twelve people in the meat department, and each one specializes in cutting certain types of meat. Tommy's job is to cut ribeye steaks. Cutting ribeye steaks is very precise and requires holding and using a knife in the same way every day. This requirement has started to cause Tommy pain in his right hand. Although Tommy still likes his work, he is getting a little bored of the repetition and is bothered by the pain.
The quality of Tommy’s work has not suffered, but the store managers can tell that he is getting bored. What could they do to keep him better engaged?
a. Purchase special ergonomic mats to help with the pain associated with standing on the hard floor every day.
b. Motivate Tommy by giving him feedback about how skilled he is in cutting ribeye and explain that customers visit the store for his custom steaks.
c. Offer Tommy more money because he is so good at cutting meat.
d. Cross train the employees in the meat department, so beef cutters can learn how to cut pork and vice versa.
e. Administer a work personality quiz to Tommy to see if there is another area in the store where he could move to, such as the produce department.
Answer: d. Cross train the employees in the meat department, so beef cutters can learn how to cut pork and vice versa.
Explanation:
Since the quality of Tommy’s work has not suffered, but the store managers can tell that he is getting bored, the thing that could be done to keep him better engaged is to cross train the employees in the meat department, so beef cutters can learn how to cut pork and vice versa. Cross training helps the workers in the company appreciate the workers of others in other department and shows workers flexibility.
If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is:
Answer:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Explanation:
If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
For example:
Total estimated overhead= $150,000
Allocation base= direct labor hours
Estimated Total number of direct labor hours= 10,000
Predetermined manufacturing overhead rate= 150,000/10,000
Predetermined manufacturing overhead rate= $15 per direct labor hour
On August 20th, one of your employees comes to you with a vacation request. The employee’s available vacation time expires on September 1st, however she wants to take her vacation between September 20th through the 25th.
She asks you to submit her vacation request to the corporate office for the week prior to September 1st, and wants you to not schedule her for the days between the 20th and 25th, and she wants her "vacation" pay for those days.
Would you do it? Why? or Why Not?
Answer:
No
Explanation:
Her vacation is expired and therefore invalid. Also she is requesting for a pay during this period which counters Amy form of sympathy for this employee. However, depending on the relationship the employee has with her employer, there might be a compromise especially if the employee really does need the vacation as she may be burned out or may have postponed vacation till expiration for the interest of the company
If national income is $5,000 billion, compensation of employees is $1,105 billion, proprietors’ income is $1,520 billion, corporate profits are $490 billion, and net interest is $128 billion, then rental income is equal to
Answer:
Rental income = $1,757 billion
Explanation:
National income is defined as the value of goods and services that a nation produces within a financial year.
Therefore it is made up of all economic actives that the nation is involved in.
The gross domestic product is a measure of the national income.
The formula for national income is given below
National income = employees compensation + proprietors' income + corporate profits + rental income +net interest
5,000 billion = 1,105 billion + 1,520 billion + 490 billion + rental income + 128 billion
Rental income = 5,000 billion - 3,243 billion
Rental income = $1,757 billion
The adjusted trial balance of Norton Company contained the following information. Assume the tax rate is 25%:
Debit Credit
Sales revenue $390,000
Sales returns and allowances $10,000
Sales discounts 5,000
Cost of goods sold 200,000
Operating expenses 110,000
Interest revenue 8,000
Interest expense 3,000
Required:
Compute income from operations.
a. $175,000
b. $65,000
c. $50,000
d. $70,000
Answer:
b. $65,000
Explanation:
Particulars Amount
Revenues
Service Revenue $390,000
Less: Sales Return and allowance $10,000
Less: Sales Discount $5,000
Net Sales Revenue $375,000
Less: Cost of Goods Sold $200,000
Gross Profit $175,000
Less: Operating Expenses $110,000
Operating Income $65,000
Thus, income from operation is $65,000
Selected Information from Balance Sheets (As of Year End for Years 0 and 1)
Year 0 Year 1
Cash 1,000 2,000
Accounts Receivables 1,000 5,000
Inventory 5,000 4,000
Property, Plant and Equipment (net) 12,000 11,000
Accounts Payable 5,000 4,000
Unearned Revenue 2,000 1,000
Bonds Payable 5,000 6,000
Common Stock 3,000 4,000
Retained Earnings 5,000 7,000
Income Statement (Year 1)
Sales 20,000
Costs of Goods Sold (8,000)
Wage Expense (4,000)
Depreciation Expense (2,000)
Loss from PP&E Sale (1,000)
Net Income Before Tax 5,000
Tax Expense (2.000)
Net Income 3.000
In the space provided, prepare the Operating section of the statement of cash flow for Year 1, using the indirect approach.
Answer:
The Operating Activities section of the Statement of Cash Flow for Year 1:
Net Income $3,000
Add non-cash expenses:
Depreciation Expense 2,000
Loss from PP&E Sale 1,000
Operating cash flow 6,000
Changes working capital -5,000
Net cash flow from operating activities 1,000
Explanation:
Changes in working capital items:
Year 0 Year 1 Changes
Accounts Receivables 1,000 5,000 -4,000
Inventory 5,000 4,000 1,000
Accounts Payable 5,000 4,000 -1,000
Unearned Revenue 2,000 1,000 -1000
Net changes in working capital -5,000
"Ayres Services acquired an asset for $80 million in 2021." The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows: ($ in millions)
2021 2022 2023 2024
Pretax accounting income $330 $350 $365 $400
Depreciation on the income statement 20 20 20 20
Depreciation on the tax return (80 ) (0 ) (0 ) (0 )
Taxable income $270 $370 $385 $420
For December 31 of each year, determine:
a. The cumulative temporary book-tax difference for the depreciable asset.
b. The balance to be reported in the deferred tax liability account.
Answer:
a. The cumulative temporary book-tax difference for the depreciable asset are as follows:
December 31, 2021 = $60 million
December 31, 2022 = $40 million
December 31, 2023 = $20 million
December 31, 2024 = $0
b. The balance to be reported in the deferred tax liability account are as follows.
December 31, 2021 = $15 million
December 31, 2022 = $10 million
December 31, 2023 = $5 million
December 31, 2024 = $0
Explanation:
Note: See the attached excel file for the calculation of cumulative temporary book-tax difference for the depreciable asset and the balance to be reported in the deferred tax liability account for December 31 of years 2021, 2022, 2023 and 2024 in bold red color.
In the attached excel file, the following formula are used:
Cumulative Temporary differences at December 31 of the current year = Cumulative Temporary differences at December 31 of the previous year + (Depreciation on the tax return at December 31 of the current year - Depreciation on the income statement at December 31 of the current year)
Balance to be reported in deferred tax liability account at December 31 of the current year = Cumulative Temporary differences at December 31 of the current year * Tax rate
Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $200,000 for a 40% ownership interest. Mickayla is contributing a building with a value of $200,000 and a tax basis of $150,000 for a 40% ownership interest, and Taylor is contributing legal services for a 20% ownership interest. Using the research skills you learned in Week 1, access RIA Checkpoint and research what amount of gain/income each owner is required to recognize under each of the following alternative situations?
a. MMT is formed as a C corporation.
b. MMT is formed as an S corporation.
c. MMT is formed as LLC.
Answer:
a. MMT is formed as a C corporation.
Mickey and Mickayla will not recognize any gain, while Taylor must recognize $100,000 as ordinary income. Mickey and Mickayla's exchange classifies under §351, but Taylor's doesn't.
b. MMT is formed as an S corporation.
Mickey and Mickayla will not recognize any gain, while Taylor must recognize $100,000 as ordinary income. Mickey and Mickayla's exchange classifies under §351, but Taylor's doesn't.
c. MMT is formed as LLC.
Mickey and Mickayla will not recognize any gain, while Taylor must recognize $100,000 as ordinary income. Mickey and Mickayla's exchange classifies under §721, but Taylor's doesn't.
Explanation:
Basically §351 and §721 are very similar except that one applies to corporations and the other applies to partnerships and LLCs. No gain will be recognize when assets are transferred in exchange for equity, and the people involved in the exchange can control the company.
Sheridan Company sells radios for $50 per unit. The fixed costs are $445000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $65000 and variable costs will be 50% of the selling price. The new break-even point in units is:
Answer:
Break-even point in units= 2,600
Explanation:
To calculate the break-even point in units, we need to use the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Fixed costs= $65,000
Contribution margin per unit= 50*0.5= $25
Break-even point in units= 65,000/25
Break-even point in units= 2,600
How can you enable your sales team to perform better?
A. by enforcing stringent rules
B. by providing them with training and other supporting material
C. by permitting them the freedom to do whatever they think is right
D. by increasing their pay more often than the rest of the workforce
Answer: i think its B because it makes the most sense out of them all
Explanation:
provide an example of two companies that have built an effective co-operation.briefly explain the relationship of it g
Answer:
An example of two companies that have built an effective co-operation is discussed below in details.
Explanation:
Louis Vuitton & BMW
Co-operation Operations: The Art of Travel
Designer Louis Vuitton and Carmaker BMW may not be the usual simple pairings. But if you believe about it, they have some significant things in general. If you concentrate on Louis Vuitton's trademark baggage lines, they're both in the industry of journey. They both value leisure. And finally, they're both well-known, fabulous brands that are recognized for high-quality craftsmanship.
Masterson, Inc., has 4.1 million shares of common stock outstanding. The current share price is $84, and the book value per share is $11. The company also has two bond issues outstanding. The first bond issue has a face value of $70 million, has a coupon rate of 5.1%, and sells for 98% of par. The second issue has a face value of $50 million, has a coupon rate of 5.60%, and sells for 108% of par. The first issue matures in 20 years, the second in 12 years. The most recent dividend was $3.95 and the dividend growth rate is 5 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 21 percent. What is the company’s WACC?
Answer:
The answer is "8.37%".
Explanation:
[tex]\text{MV of equity} = \text{equity price} \times \text{number of outstanding shares}[/tex]
[tex]=84 \times 4100000\\\\=344400000[/tex]
[tex]\text{MV of Bond1}=\text{Par value} \times \text{bonds outstanding} \times \text{age of percentage}[/tex]
[tex]=1000 \times 70000 \times 0.98 \\\\=68600000[/tex]
[tex]\text{MV of Bond2}=\text{Par value} \times \text{bonds outstanding} \times \text{age of percentage}[/tex]
[tex]=1000 \times 50000 \times 1.08 \\\\=54000000[/tex]
[tex]\text{MV of firm} = \text{MV of Equity} + \text{MV of Bond1}+ \text{MV of Bond 2}[/tex]
[tex]=344400000+68600000+54000000\\\\=467000000[/tex]
[tex]\text{Weight of equity W(E)} = \frac{\text{MV of Equity}}{\text{MV of firm}}[/tex]
[tex]= \frac{344400000}{467000000}\\\\=0.7375[/tex]
[tex]\text{Weight of debt W(D)}= \frac{\text{MV of Bond}}{\text{MV of firm}}[/tex]
[tex]= \frac{122600000}{467000000}\\\\=0.2625[/tex]
Equity charges
By DDM.
[tex]\text{Price = new dividend} \times \frac{(1 + \text{rate of growth})}{( \text{Equity expense-rate of growth)}}[/tex]
[tex]84 = 3.95 \times \frac{(1+0.05)}{(\text{Cost of equity}- 0.05)}\\\\84 = 3.95 \times \frac{(1.05)}{(\text{Cost of equity} - 0.05)}\\\\84 = \frac{4.1475}{ (\text{Cost of equity} - 0.05)}\\\\\text{Cost of equity} -0.05 = \frac{4.1475}{84}\\\\\text{Cost of equity} -0.05 = 0.049375\\\\\text{Cost of equity} = 0.049375 + 0.05\\\\\text{Cost of equity} = 0.099375 \\\\\text{Cost of equity} \% = 9.9375 \% \ \ \ or \ \ \ 9.94 \% \\\\[/tex]
Debt expenses
Bond1
[tex]K = N \times 2 \\\\[/tex]
[tex]Bond \ Price = \sum [ \frac{\text{(Semi Annual Coupon)}}{(1 + \frac{YTM}{2})^k}] + \frac{Par\ value}{(1 + \frac{YTM}{2})^{N \times 2}}[/tex]
[tex]k=1\\\\K =20 \times 2\\\\980 = \sum [ \frac {(5.1 \times \frac{1000}{200})}{(1 + \frac{YTM}{200})^k}] + \frac{1000}{(1 + \frac{YTM}{200})}^{20 \times 2}\\\\k=1\\\\\ YTM1 = 5.2628923903\\\\Bond2\\[/tex]
[tex]K = N \times 2[/tex]
[tex]Bond \ Price = \sum [ \frac{\text{(Semi Annual Coupon)}}{(1 + \frac{YTM}{2})^k}] + \frac{Par\ value}{(1 + \frac{YTM}{2})^{N \times 2}}[/tex]
[tex]k=1\\\\K =12 \times 2\\\\[/tex]
[tex]1080 =\sum [\frac{(5.6 \times \frac{1000}{200})}{(1 + \frac{YTM}{200})^k}] +\frac{1000}{(1 +\frac{YTM}{200})^{12 \times 2}} \\\\k=1\\\\YTM2 = 4.72\\\\[/tex]
[tex]\text{Company debt costs} = YTM1 times \frac{(MV \ bond1)}{(MV \ bond1+MV \ bond2)}+YTM2 \times \frac{(MV \ bond2)}{(MV \ bond2)}\\\\[/tex]
The cost of the debt for the company:
[tex]= 5.2628923903 \times \frac{(68600000)}{(68600000+54000000)}+4.72 \times \frac{(68600000)}{(68600000+54000000)}\\\\[/tex]
Business debt cost=[tex]5.02 \% \\\\[/tex]
after taxation cost of debt:
[tex]= \text{cost of debt} \times (1- tax \ rate)\\\\= 5.02 \times (1-0.21)\\\\= 3.9658\\\\[/tex]
[tex]WACC= \text{after debt charges} \times W(D)+equity cost \times W(E) \\\\[/tex]
[tex]=3.97 \times 0.2625+9.94 \times 0.7375 \\\\ =8.37 \% \\\\[/tex]
Bank Reconciliation and Entries The cash account for Stone Systems at July 31, 20Y5, indicated a balance of $12,270. The bank statement indicated a balance of $15,440 on July 31, 20Y5. Comparing the bank statement and the accompanying canceled checks and memos with the records reveals the following reconciling items: Checks outstanding totaled $5,560. A deposit of $5,790, representing receipts of July 31, had been made too late to appear on the bank statement. The bank had collected $3,010 on a note left for collection. The face of the note was $2,860. A check for $800 returned with the statement had been incorrectly recorded by Stone Systems as $880. The check was for the payment of an obligation to Holland Co. for the purchase of office supplies on account. A check drawn for $400 had been incorrectly charged by the bank as $40. Bank service charges for July amounted to $50.
Required:
Prepare a bank reconciliation.
Answer: Please see below for the reconciliation of bank and book balance for Stone systems as $15,310
Explanation:
Bank Reconciliation Statement for July 31 , 20Y5 for Stone Systems
Particulars Amount
Balance on bank statement $15,440
Additions:
Outstanding Deposits $5,790
Deductions:
Outstanding checks $5,560
Bank Error (400-40) $360
Adjusted bank balance $15,310
Balance in books $12,270.
Additions:
Note Collection plus interest $3,010
Incorrect recording of check
($880-$800) $80
Deductions
Bank Service charges $50
Adjusted book balance $15,310
Sheridan Company pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Sheridan accrues salaries expense only at its December 31 year end. Data relating to salaries earned in December 2020 are as follows: Last payroll was paid on 12/26/20, for the 2-week period ended 12/26/20. Overtime pay earned in the 2-week period ended 12/26/20 was $24000. Remaining work days in 2020 were December 29, 30, 31, on which days there was no overtime. The recurring biweekly salaries total $444000.
Assuming a five-day workweek, Sheridan should record a liability at December 31, 2020 for accrued salaries of:_________.
a. $266400
b. $290400
c. $133200
d. $157200
Answer:
d. $157,200
Explanation:
Calculation for the amount that Sheridan should record a liability at December 31, 2020 for accrued salaries
Liability for accrued salary=$24,000 + ($444,000 ÷ 10 days × 3)
Liability for accrued salary=$24,000+$133,200
Liability for accrued salary= $157,200
Therefore the amount that Sheridan should record a liability at December 31, 2020 for accrued salaries will be $157,200
How is a proceeding for violation of the regulations in Circular 230 instituted against a tax practitioner
Incomplete question. The options read;
A. An aggrieved taxpayer files a petition with the United States Tax Court stating a claim against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary
B. The IRS representative signs a complaint naming the tax practitioner and files the complaint with the Administrative Law Judge (ALJ)
C. The Secretary of the Treasury files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary in the United States District Court for the District of Columbia
D. The Commissioner of the IRS files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary with the United States Tax Court
Answer:
D. The Commissioner of the IRS files a complaint against the attorney, certified public accountant, registered tax return preparer, enrolled agent, enrolled retirement plan agent, or enrolled actuary with the United States Tax Court
Explanation:
According to the information on the thetaxadviser website, when there is a violation of the regulations in Circular 230 instituted by a tax practitioner a complaint would be filed, and if found guilty, he or she "may be censured, suspended, or disbarred from practice before the IRS."
Usually, the Office of Professional Responsibility would take up the case against the tax practitioner.
Brief Exercise 14-08 Ziegler Corporation reports net income of $380,000 and a weighted-average of 200,000 shares of common stock outstanding for the year. Compute the earnings per share of common stock.
Answer:
$1.9
Explanation:
The computation of the earning per share is shown below:
Earning per share is
= Net income ÷ Weighted number of oustanding shares
= $380,000 ÷ 200,000 shares
= $1.9
By simply divide the net income from the Weighted number of oustanding shares, the earning per share could be determined
Hence, the earning per share is $1.9