Answer and Explanation:
The Preparation of note disclosure for the long-term debt is shown below:-
Note disclosure for the long-term debt
At the year end 31, December 2020
Year Amount Working note
2021 0
2022 $2,752,000 From annual sinking fund payment
2023 $4,562,000 ($1,810,000 annual sinking fund payment + $2,752,000 note payable maturity)
2024 $7,582,000 ($4,830,000 annual sinking fund payment + $2,752,000 bond maturity)
2025 $2,752,000 From annual sinking fund payment
A company's income statement showed the following: net income, $117,000; depreciation expense, $31,500; and gain on sale of plant assets, $5,500. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,700; merchandise inventory increased $19,500; prepaid expenses increased $6,500; accounts payable increased $3,700. Calculate the net cash provided or used by operating activities. Multiple Choice $143,400. $141,400. $148,200. $130,400. $169,400.
Answer:
$130,400
Explanation:
The computation of net cash provided or used by operating activities is shown below:-
Net cash provided or used by operating activities
Net income $117,000
Depreciation expense $31,500
Gain on sale of plant assets ($5,500)
Accounts receivable decreased $9,700
Increase inventory ($19,500)
Prepaid expenses increased ($6,500)
Increase account payable $3,700
Net cash flow from
operating activities $130,400
Therefore the Net cash flow from operating activities is $130,400
At December 31, the unadjusted trial balance of H&R Tacks reports Software of $34,500 and and zero balances in Accumulated Amortization and Amortization Expense. Amortization for the period is estimated to be $6,900. Prepare the adjusting journal entry on December 31. Prepare the T-accounts for each account, enter the unadjusted balances, post the adjusting journal entry, and report the adjusted balance.
Answer:
Dr amortization expense $6,900
Cr Accumulated amortization $6,900
Explanation:
The adjusting journal on 31 December is to reflect the amortization charge of $6,900 in both accumulated amortization and amortization expense accounts.
Find attached t-accounts,note that amortization expense account would not have a closing balance as the amount of amortization is written to income statement
30. Oriole, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $254,152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4 year useful life and no salvage value. Oriole, Inc.’s incremental borrowing rate is 11% and the rate implicit in the lease (which is known by Oriole, Inc.) is 9%. Assuming that this lease is properly classified as a finance lease, what is the amount of Lease Liability reduction recorded in first year after the lease inception?
Answer:
$897,484.
Explanation:
Given:
Annual Payment = $254,152
The following company's average loan rate seems to be 11 per cent as well as the implied cost of the contract recognized by the company is 9 per cent.
Thus, the price implied in the contract that is recognized to the company would be 9 per cent although the contract doesn't often shift possession unless there is a negotiating opportunity to buy.
Let the lease year to Y = 4, and I = 9%
So, current value of the annuity is Y=4, I = 9% i.e., 3.53129
So, the cost documented for the contracted asset at the beginning of the contract [tex]=254,152\times3.53129=897,484[/tex]
Amount documented at the beginning of the contract for such contracted asset = $897,484
CSUSM is a zero growth company. It currently has zero debt and its earnings before interest and taxes (EBIT) are $85,000. CSUSM 's current cost of equity is 11%, and its tax rate is 21%. The firm has 15,000 shares of common stock outstanding. Assume that CSUSM is considering changing from its original capital structure to a new capital structure with 39% debt and 61% equity. This results in a weighted average cost of capital equal to 8.7% and a new value of operations of $576,345. Assume CSUSM raises $165,000 in new debt and purchases T-bills to hold until it makes the stock repurchase. What is the stock price per share immediately after issuing the debt but prior to the repurchase?
Answer:
Check the explanation
Explanation:
Calculation of CSUSM 's New value of Operation :
For the purpose of Calculation of New Value of Operation we need to first calculate new WACC
Given :
Debt value ( Wd) = 30% or 0.30
Equity Value ( We)= 70% or 0.70
Cost of Debt ( Kd) =8%
New cost of equity (Ke) =12%
WACC =Kd(1-T) * Wd + Ke* We
WACC =[8%(1-0.40) * 0.30] + [12% * 0.70]
= [4.80% * 0.30 ] + [8.4 %]
= 1.44% + 8.4%
= 9.84 %
Given EBIT = $ 80,000
Tax rate = 40%
Currently the company has no growth. Therefore growth rate is 0 %
Value of New Operation =FCF / WACC
=EBIT (1-T) / WACC
=$80,000 (1-0.40)/ 9.84%
= $ 487,804.88
(Working with the balance sheet) The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior flavor. At the end of the most recent year the firm had current assets of $ 48 comma 800, net fixed assets of $ 248 comma 800, current liabilities of $ 28 comma 500, and long-term debt of $ 98 comma 200. a. Calculate Caraway's stockholders' equity. b. What is the firm's net working capital? c. If Caraway's current liabilities consist of $ 18 comma 500 in accounts payable and $ 10 comma 000 in short-term debt (notes payable), what is the firm's net working capital? a. Calculate Caraway's stockholders' equity.
Answer:
A. $170,900
B. $20,300
C. $ 19,800
Explanation:
A. Accounting Equation ;
Assets = Equity + Liabilities
Therefore Equity = Assets - Liabilities
Total Assets - Caraway Seed Company
Current assets $ 48,800
Net fixed assets $ 248,800
Total Assets $ 297,600
Total Liabilities - Caraway Seed Company
current liabilities $ 28,500
long-term debt $ 98,200
Total $126,700
Equity = $ 297,600 - $126,700 = $170,900
B. Net working capital = Current Assets - Current liabilities
= $ 48,800 - $ 28,500
= $20,300
C. Net working capital = Current Assets - Current liabilities
= $ 48,800 - ( $18,500 + 10,500)
= $ 19,800
Running Co. had an equity investment where it owned less than 20% of an investee, and therefore Running Co. was not able to exercise significant influence. Information about the investment is below: 20X1 20X2 Investment cost 170,000 170,000 Fair value 181,400 155,000 Total unrealized gain (loss) 11,400 (15,000) The company sold the investment during 20X3 for the below price: Sales price 192,400 What is the gain (loss) recorded in the income statement in the year of sale, in 20X3
Answer:
Gain or Loss to be reocrded in Financial Statement: 151600 - 155000= 3400 loss to be booked as Fair value recorded in the books as in year ended 20X2 is 155000.
(1) Reporting of Capital Assets. Are capital assets reported as a line-item in the government-wide statement of net position? Are nondepreciable capital assets reported on a separate line from depreciable capital assets, or are they separately reported in the notes to the financial statements? Do the notes include capital asset disclosures, such as those for the City and County of Denver shown in Illustration 5–2? Does the disclosure show beginning balances, increases and decreases, and ending balances for each major class of capital assets, as well as the same information for accumulated depreciation for each major class? Are these disclosures presented separately for the capital assets of governmental activities, business-type activities, and discretely presented component units? Do the notes specify capitalization thresholds for all capital assets, including infrastructure? Do the notes show the amounts of depreciation expense assigned to each major function or program for governmental activities at the government-wide level? Are the depreciation policies and estimated lives of major classes of depreciable assets disclosed? Do the notes include the entity’s policies regarding capitalization of collections of works of art and historical treasures? If collections are capitalized, are they depreciated?
Answer:
Principal resources are reported as a line-item within the management wide declaration of net situation. Non-depreciable principal resources are individually reported within the proceedings to the money declarations. The revealing expressions starting equilibriums, will increase and reduces, and finish stabilities for every main category of principal assets, yet because the same info for accrued devaluation for every key category. These revelations are given individually for the wealth assets of administrative actions, occupational sort actions, and unnoticeably given part units. The summaries stipulate capitalization inceptions for all principal assets, together with arrangement. The summaries display the quantities of devaluation expenditure assigned to every major operate or package for administrative actions at the government-wide flat. The decline strategies and calculable lives of main categories of depreciable resources are released. Summaries do reveal the strategies relating to capitalization of assortment of skills and historic materials if some. These collectibles aren't criticized however market price of those art effort is measured to reason gain/ injury at the year finish. Accounting strategies for possessions no inheritable underneath capita tenancy are obviously mere
Prior to September 30, a company has never had any treasury stock transactions. A company repurchased 1,000 shares of its $2 par common stock on September 30 for $20 per share. On October 2, it reissued 400 of these shares at $21 per share. On October 12, it reissued the remaining 600 shares at $19 per share. The journal entry to record the reissuance of the shares on October 2 would be:
Answer: Please refer to Explanation
Explanation:
The following will be the journal entry on October 2nd
October 2
DR Cash $8,400
CR Treasury Stock $8,000
CR Additional Paid-in Capital $400
(To record reissuance of Treasury Stock)
Workings
Cash = 400 * 21
= $8,400
Treasury Stock = 400 * 20 (purchase price)
= $8,000
Additional Paid-in Capital = (21 - 20) * 400
= $400
On March 31, 20Y9, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture store, are as follows: Accounts Receivable $ 170,000 Accumulated Depreciation-Building 750,000 Administrative Expenses 435,000 Building 3,500,000 Cash 80,000 Common Stock 300,000 Cost of Goods Sold 5,500,000 Dividends 175,000 Interest Expense 15,000 Inventory 980,000 Notes Payable 250,000 Office Supplies 20,000 Retained Earnings 1,987,000 Salaries Payable 8,000 Sales 8,245,000 Selling Expenses 575,000 Store Supplies 90,000 A. Prepare a multiple-step income statement for the fiscal year ended March 31, 20Y9. Be sure to complete the statement heading. Refer to the information given in the exercise and to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign. B. What is a major advantage of the multiple-step income statement over the single-step income statement?
Answer and Explanation:
A. The preparation of the multiple income statement is presented below:
Royal Furnishings Company
Multiple-step income statement
For the fiscal year ended March 31, 20Y9
Sales $8,245,000
Less: Cost of goods sold -$5,500,000
Gross profit $2,745,000
Less: Operating expenses
Administrative expenses -$435,000
Selling expenses -$575,000
Total operating expenses -$1,010,000
Operating income $1,735,000
Non operating income or others
Less: Interest expense -$15,000
Net income $1,720,000
B. The major advantage of the multi-step income statement represents the relation between the gross profit ratio i.e. gross profit and revenue measured as a percentage and also demonstrates the various types of levels of operating expenses, operating profits, non-operating profits, etc.
Marle Construction enters into a contract with a customer to build a warehouse for $950,000 on March 30, 2018 with a performance bonus of $50,000 if the building is completed by July 31, 2018. The bonus is reduced by $10,000 each week that completion is delayed. Marle commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability July 31, 2018 65% August 7, 2018 5% August 14, 2018 5% August 21, 2018 The transaction price for this transaction, based on the expected value approach, is:_______.
a. $950,000
b. $995,000
c. $685,000
d. $652,500
Answer:
b. $995,000
Explanation:
The computation of the transaction price based on the expected value approach is shown below:
The formula is
= (Building cost of warehouse + bonus) × probability percentage
Date Calculation Amount
July 31, 2018 ($950,000+$50,000) × 0.65 $650,000
August 7, 2018 ($950,000+$40,000) × 0.25 $247,500
August 14, 2018 ($950,000+$30,000) × 0.05 $49,000
August 21, 2018 ($950,000+$20,000) × 0.05 $48,500
Total $995,000
Since the bonus is reduced $10,000 each week so $10,000 is deducted for every delayed week
Cesar Ruiz was reviewing his company's activities at the end of the year (2017) and decided to prepare a retained earnings statement. At the beginning of the year his assets were $530,000, liabilities were $140,000, and common stock was $120,000. The net income for the year was $250,000. Dividends of $220,000 were paid during the year. Prepare a retained earnings statement in good form. (List items that increase retained earnings first.) CESAR RUIZ COMPANY Retained Earnings Statement $ : : $ Click if you would like to Show Work for this question: Open Show Work
Answer:
Retained earnings is $300,000
Explanation:
The first task here that would aid the preparation of retained earnings statement for the current year is to first of determine the retained earnings for last year based on the information provided.
Retained earnings opening=Assets-liabilities-common stock
=$530,000-$140,000-$120,000=$270,000
Retained earnings statement for the current year
Opening retained earnings $270,000
net income for the year $250,000
Total earnings $520,000
dividends ($220,000)
Closing retained earnings $300,000
Retained earnings are $300,000, and the retained earning statement is given in the image below.
What is retained earning?After paying all direct and indirect costs, income taxes, and dividends to shareholders, a company's retained profits are the amount of profit left over.
This is the portion of the company's equity that can be utilized to invest in new equipment, research and development, and marketing.
Computation of Opening mount of retained earning:
[tex]\text{Ope. Retained Earnings}= \text{Assets - liabilities - Common Stock}\\\text{Ope. Retained Earnings}= \$5,30,000-\$1,40,000-\$1,20,000\\\text{Ope. Retained Earnings}= $270,000[/tex]
Therefore, retained earning statement is given in the image below.
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Angara Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system:
Activity Cost Pool (and Activity Measure) Total Cost
Machine related (machine-hours) $ 103,800
Batch setup (setups) $ 402,600
Order size (direct labor-hours) $ 82,600
Total Activity
Activity Cost Pools Product X Product Y Total
Machine related 800 5,200 6,000
Batch setup 3,100 2,900 6,000
Order size 6,000 1,000 7,000
The total amount of overhead cost allocated to Product X would be closest to: ________.
Answer:
Total amount = $292,650
Explanation:
As per the data given in the question,
Machine related (machine-hours) = $103,800
Batch setup (setups) = $402,600
Order size (direct labor-hours) = $82,600
For product X :
Machine related = ($103,800÷6000×800)
= $13,840
Batch setup = $402,600 × 3,100 ÷6,000
= $208,010
General factory = $82,600 × 6,000 ÷ 7000 = $70,800
Total amount = ($13,840 + $208,010 + $70,800)
= $292,650
Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for you to consider in preparing the statement:
O+ a. Increase in accounts payable
F- b. Payment of dividends
O- c. Decrease in accrued liabilities
F+ d. Issuance of common stock
O- e. Gain on sale of building
O+ f. Loss on sale of land
O+ g. Depreciation expense
O- h. Increase in merchandise inventory
O+ i. Decrease in accounts receivable
I- j. Purchase of equipment
Answer:
O+ a. Increase in accounts payable
F- b. Payment of dividends
O- c. Decrease in accrued liabilities
F+ d. Issuance of common stock
O- e. Gain on sale of building
O+ f. Loss on sale of land
O+ g. Depreciation expense
O- h. Increase in merchandise inventory
O+ i. Decrease in accounts receivable
I- j. Purchase of equipment
Explanation:
The requirement of the question is to indicate whether each of the items is an addition to addition to net income (O+) or subtraction (O-) under operating activities section, investing activity (cash inflow I+), (cash outflow I-),financing activity (cash inflow F+), (cash outflow F-) and activity not used to prepare the cash flows.
All the signs above are correct.
Hey guys please share your opinion:
would you rather have one credit card that you use for everything?
or would you rather have one credit card with a low limit for online purchases and another for everyday purchases?
THANKS
Answer:
I'd rather have one credit card because it'll be easier to have just one then having to take care of 2. also I believe each credit card on it's own has like interest on it? it's more of a hassle too have 2 basically
Explanation:
Presented below is information available for Concord Corporation. Current Assets Cash $ 4500 Short-term investments 50500 Accounts receivable 66000 Inventory 86000 Prepaid expenses 35000 Total current assets $ 242000 Total current liabilities are $50000. The acid-test ratio for Concord is:
Answer:
2.42 times
Explanation:
The computation of the acid test ratio is shown below:
Acid test ratio = Quick Assets ÷ Current liabilities
where,
Quick Assets = Cash + short term investment + account receivable
= $4,500 + $50,500 + $66,000
= $121,000
And, the current liabilities is $50,000
So the acid test ratio is
= $121,000 ÷ 50,000
= 2.42 times
Basically we applied the above formula to find out the acid test ratio
Wicker Rockers, Inc. is planning to offer a defined contribution plan for its employees. The company would like to incorporate a "cliff" vesting schedule for the employer contributions into the plan. What is the minimum vesting period the company can choose for a "cliff" vesting schedule
Answer:3 years
Explanation:
Cliff vesting is when an employee of a company becomes fully vested on a specified date rather than the employee becoming partially vested in increasing amounts over extended period. Cliff Vesting is a process whereby the employees are entitled to full benefits from their firm’s pension policies and qualified retirement plans on a given date.
Upon the completion of the cliff period, employees receive full benefits. The Pension Protection Act of 2006 deduced a three-year cliff vesting schedule for the designated defined-contribution plans which includes 401Ks.
Tiki Corporation had net income of $120,000 during the year. Depreciation expense was $6,000. The following information is available: Held- to-Maturity Bonds purchased25,000increase Common Stock issued70,000increase Accounts Receivable10,000decrease Accounts Payable15,000increase Gain on sale of AFS Investment5,000increase What amount should Tiki report as net cash provided by operating activities in its statement of cash flows for the year
Answer:
Tiki should report $101,000 as net cash provided by operating activities in its statement of cash flows for the year.
Explanation:
Tiki Corporation
Statement of cash flows (extract)
Net income $120,000
Add: Depreciation expense 6,000
Less: Increase Accounts Receivable (10,000)
Less: Decrease in Accounts Payable (15,000)
Net cash flows from operating activities $101,000
On April 1, a company purchased two units of inventory, A and B. The cost of unit A was $640, and the cost of unit B was $550. On April 30, the company had not sold the inventory. The net realizable value of unit A was now $660 while the net realizable value of unit B was $480. The adjustment associated with the lower of cost and net realizable value on April 30 will be:
Answer: b
Explanation:
Service Department Charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: ResidentialCommercialGovernment Contract Sales$2,000,000 $3,250,000 $2,900,000 Number of employees: Weekly payroll (52 weeks per year)400 250 150 Monthly payroll80 30 10 Number of purchase requisitions per year7,500 3,000 2,000 a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.
Answer and Explanation:
The computation of the total amount of payroll checks and purchased requisitions processed per year is shown below:
Particulars Residential Commercial Government Contract Total
Number of payroll checks:
Weekly payroll $20,800) $13,000 $7,800 $41,600
(400 × 52 weeks) (250 × 52 weeks ) (150 × 52 weeks)
Monthly payroll $960 $360 $120 $1,440
(80 × 12) (30 × 12) (10 × 12)
Total $21,760 $13,360 $7,920 $43,040
Number of purchase requisitions per year 7,500 3,000 2,000 12,500
Prepare the following journal entries in proper journal entry form. 1. Billed a customer for a $2,400 job. 2. Received $4,800 to start an eight-month job, beginning next month. 3. Started a company by contributing equipment worth $5,400, land worth $180,000 and cash of $30,000 into a business checking account.
Answer and Explanation:
The Journal entry is shown below:-
1. Accounts receivable Dr, $2,400
To Service revenue $2,400
(Being services revenue is recorded)
Here we debited the accounts receivable as it increased the assets and we credited the service revenue as it increased the revenue
2. Cash Dr, $4,800
To Unearned revenue $4,800
(Being unearned revenue is recorded)
Here we debited the cash as it increased the assets and we credited the unearned revenue as it increased the liabilities
3. Equipment Dr, $5,400
Land Dr, $180,000
Cash Dr, $30,000
To Capital $215,400
(Being assets investment is recorded)
Here we debited the equipment, land and cash as it increased the assets and we credited the capital as it increased the liabilities
Suppose the market supply curve is p=5Q at a price of 10 , producer surplus equals
Answer: $10
Explanation:
The market supply curve is an upward sloping curve that depict the positive relationship that exists between the price and quantity supplied. It is derived by summing the quantity that the suppliers are willing to produce when the goods can be sold for a given price.
Suppose the market supply curve is p=5Q at a price of 10 , the producer surplus will be:
Producer surplus= (base × height)/2
Producer surplus = (2 × 10)/2
= 20/2
= $10
Given a supply curve of p = 5q, the producer surplus is equal to $10
From this question we have been given the price to be = p = 10
The formula says p = 5Q
10 = 5Q
Therefore Q= 10/5
Q = 2
Using the formula of area of a triangle,
1/2 * Base * height
We have the base = 2
While the height = 10
1/2*10*2
0.5*20
= 10
Therefore given a supply curve of p = 5q, the producer surplus is equal to $10
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Marks Corporation's balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 47 $ 37 Accounts receivable 53 57 Inventory 63 60 Property, plant, and equipment 548 440 Less accumulated depreciation 295 255 Total assets $ 416 $ 339 Liabilities and stockholders' equity: Accounts payable $ 52 $ 50 Bonds payable 260 250 Common stock 51 50 Retained earnings 53 (11 ) Total liabilities and stockholders' equity $ 416 $ 339 Net income for the year was $77. Cash dividends were $13. The company did not dispose of any property, plant, and equipment, retire any bonds payable, or repurchase any of its own common stock during the year. Required: Prepare a statement of cash flows in good form using the indirect method.
Answer:
statement of cash flows using the indirect method.
Cash Flow from Operating Activities
Net income for the year was $77
Adjustment of Non-Cash Items :
Depreciation $40
Adjustment for Working Capital items:
Decrease in Accounts receivable $4
Increase in Inventory ($3)
Increase in Accounts Payable $2
Net Cash From Operating Activities $120
Cash Flow from Investing Activities
Purchases of Property, plant, and equipment ($108)
Net Cash used in Investing Activities ($108)
Cash Flow from Financing Activities
Proceeds from Common Stock Issue $1
Dividends Paid ($13)
Net Cash used in Financing Activities ($12)
Net Cash Inflow/(Outflow) during the period $10
Cash and Cash Equivalents at Beginning of the Period $37
Cash and Cash Equivalents at End of the Period $47
Explanation:
Show the Movement of Cash in the 3 categories of
Cash flow from Operating ActivitiesCash flow from Investing ActivitiesCash flow from Financing ActivitiesRed Co. acquired 100% of Green, Inc. on January 1, 2017. On that date, Green had land with a book value of $42,000 and a fair value of $52,000. Also, on the date of acquisition, Green had a building with a book value of $200,000 and a fair value of $390,000. Green had equipment with a book value of $350,000 and a fair value of $280,000. The building had a 10-year remaining useful life and the equipment had a 5-year remaining useful life. In Red’s December 31, 2017 consolidated worksheet, what total amount of excess fair over book value amortization expense adjustments should Red recognize resulting from its 100% acquisition of Green?
Answer:
$5,000
Explanation:
The computation of total amount of excess fair over book value amortization expense adjustments to be recognized by red is shown below:-
Excess of fair value over book value = Land fair value - Land book value
= $52,000 -$42,000
= -$10,000
Here land is not amortized
Excess of fair value over book value = Building fair value - Building book value
= $390,000 - $200,000
= $190,000
Excess fair value over book value amortization expense adjustments to be recognized by red = Excess of fair value over book value of building ÷ Number of Years
= $190,000 ÷ 10
= $19,000
Excess of fair value over book value = Equipment fair value - Equipment book value
= $280,000 - $350,000
= ($70,000)
Excess fair value over book value amortization expense adjustments to be recognized by red for equipment = Excess of fair value over book value of equipment ÷ Number of Years
= ($70,000) ÷ 5
= ($14,000)
Total amount of excess fair over book value amortization expense adjustments to be recognized by red
= $19,000 - $14,000
= $5,000
The Brenmar Sales Company had a gross profit margin (gross profitsdivided bysales) of 26 percent and sales of $ 8.3 million last year. 78 percent of the firm's sales are on credit, and the remainder are cash sales. Brenmar's current assets equal $ 1.9 million, its current liabilities equal $ 298 comma 900, and it has $ 108 comma 800 in cash plus marketable securities. a. If Brenmar's accounts receivable equal $ 562 comma 300, what is its average collection period? b. If Brenmar reduces its average collection period to 15 days, what will be its new level of accounts receivable? c. Brenmar's inventory turnover ratio is 9.2 times. What is the level of Brenmar's inventories?
Answer:
a. 31.70 days
b. $266,054.79
c. $667,608.70
Explanation:
a. If Brenmar's accounts receivable equal $ 562 comma 300, what is its average collection period?
Credit sales = $8,300,000 * 78% = $6,474,000
Average collection period = (Accounts receivable / Credit sales) * 365 = ($562,300 / $6,474,000) * 365 = 31.70 days
b. If Brenmar reduces its average collection period to 15 days, what will be its new level of accounts receivable?
Average Collection Period=365*Account Receivables/Credit Sales
New Account Receivables =Average Collection Period * (Credit Sales / 365) = 15 * ($6,474,000 / 365) = $266,054.79
c. Brenmar's inventory turnover ratio is 9.2 times. What is the level of Brenmar's inventories?
Gross Profit = Sales * Gross Profit Margin = $8,300,000 * 26% = $2,158,000
Cost of goods sold = Sales - Gross Profit = $8,300,000 - 2,158,000 = $6,142,000
Inventory = Cost of goods sold / Inventory Turnover Ratio = $6,142,000 / 9.2 = $667,608.70
The predetermined overhead rate for Zane Company is $5, comprised of a variable overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $150000 was divided by normal capacity of 30000 direct labor hours, to arrive at the predetermined overhead rate of $5. Actual overhead for June was $9500 variable and $6050 fixed, and standard hours allowed for the product produced in June was 3000 hours. The total overhead variance is
Answer:
Total Overhead Variance= $500 unfavorable
Explanation:
The total overhead variance is the difference between actual overhead and the applied overhead.
Actual Overhead = Variable + Fixed= $9500 + $6050= $ 15,550
Budgeted Overhead for 30000 direct labor hours = $ 150,000
Applied Overhead for 3000 hours = 3000 *$5= $15000
Total Overhead Variance= Actual Overhead Less Applied Overhead
= $15,500- $ 15000= $500 unfavorable
As actual is greater than applied it is unfavorable.
Answer:
$550 unfavorable.
Explanation:
Total actual overhead = $9,500 + $6,050 = $15,550
Total predetermined overhead = Predetermined overhead rate * Standard hours = $5 * 3,000 = $15,000
Total overhead variance = $15,550 - $15,000 = $550 unfavorable.
Note: It is unfavorable because total actual is greater than total predetermined overhead.
The 12/31/2018 balance sheet of Despot Inc. included the following: Common stock, 25 million shares at $20 par $ 500 million Paid-in capital—excess of par 3,000 million Retained earnings 980 million In January 2018, Despot recorded a transaction with this journal entry: Cash 150 million Common stock 100 million Paid-in capital—excess of par 50 million In February 2018, Despot declared cash dividends of $12 million to be paid in April of that year. What effect did the April transaction have on Despot's accounts? Decreased assets and liabilities. Increased liabilities and decreased shareholders' equity. Decreased assets and shareholders' equity. None of these answer choices are correct
Answer: Decreased assets and liabilities.
Explanation:
Both assets and Liabilities decrease as a result of the April transaction because first, Cash is used to pay the Dividend which reduces the cash account and Cash is an Asset.
Liabilities also decrease because when the dividends were declared in February, Despot Inc had to create a liability in their books to cater for the payment of the dividends. Now that the dividends have been paid, that figure will be removed therefore reducing Liabilities.
Bonka Toys is planning to buy a robot costing $75,000. After 5 years its salvage value will be $18,000. An overhaul costing $10,000 will be needed in Year 3. Operations and Maintenance costs will be $2000 per year. What is the cash flow stream for using this robot? (Hint: cash flow stream is a set of yearly cash flows for purchasing, using, and selling this robot).
Question:
Bonka Toys is planning to buy a robot costing $75,000. After 5 years its salvage value will be $18,000. An overhaul costing $10,000 will be needed in Year 3. Operations and Maintenance costs will be $2000 per year. What is the cash flow stream for using this robot? (Hint: cash flow stream is a set of yearly cash flows for purchasing, using, and selling this robot).
Assuming an interest rate of 10%
Note this was added by the tutor
Equivalent annual cost = $2646.41
Explanation:
The cash flow stream = Present value of cost / Annuity factor
PV of cost
PV of salvage value = 8,000× 1.1^(-4) =5464.107
PV of operating cost = 2000 × (1- 1.1^-4)/0.1 )= 6339.730
PV of overhaul costing = 10,000 × 1.1^(-3) = 7513.148
Present value (PV) of total cost:
= 6339.73 + 7513.148- 5464.10=8388.77
Annuity factor for 4 years at 10% = 3.1698
Cash flow stream = 8388.771 /3.1698
=$ 2,646.41
Equivalent annual cost = $2646.41
Demand for consumer goods is necessarily variable. Forecasting the demand for consumer goods is an important business activity, as all businesses have to plan ahead. Manufacturer of consumer goods has been studying the demand for one of their products and the level of demand is given in the following stem and leaf plot, where stem unit is 100 and leaf unit is 10. Stem Leaf 1 1, 2, 3, 4.5, 5, 6, 7, 7, 9, 9.5 2 0, 0, 0, 0, 0, 0, 0, 0, 1, 1, 2, 4, 5, 7, 9 3 0, 0, 0, 2, 8 4 5 0 6 7 8 0 9 10 11 12 0 The outer fences are ___________.
Answer:
7.5 to 467.5.
Explanation:
Please note that In order to be fast, I make use of excel during the Calculation.
So, the first thing to do is to make sure that the observation is arranged in an increasing order.
Step one: Calculate the value for J1 and J3.
Know that J1 = J3. Where J3 = 3rd quartile.
Hence, J1 = 1st QUARTILE = QUARTILE. EXC (data, 1) = 18.
Also, J3 = QUARTILE. EXC(data, 3). = 29.5.
Therefore, the difference between the first quartile and the third QUARTILE = 29.5 - 18 = 11.5.
Step two: calculate the value for the higher fence and the lower fence respectively.
Thus, for the higher fence we have;
J3 + 1.5( 11.5).
= 29.5 + 1.5(11.5).
= 46.75.= (46.75 × 10) = 467.5).
Then, for the lower fence;
J1 - 1.5( 11.5).
= 18 - 1.5(11.5).
= 0.75 = (.75 × 10) = 7.5.
Nicholas Health Systems recently reported an EBITDA of $25.0 million and net income of $15.8 million. It had $2.0 million of interest expense, and its federal tax rate was 21% (ignore any possible state corporate taxes). What was its charge for depreciation and amortization
Answer:
Depreciation and Amortization= $3,000,000
Explanation:
Giving the following information:
Nicholas Health Systems recently reported an EBITDA of $25.0 million and a net income of $15.8 million. It had $2.0 million of interest expense, and its federal tax rate was 21%
We need to reverse engineer the net income calculation to determine the depreciation and amortization:
EBT= net income/(1-t)
EBT= 15,800,000/(1 - 0.21)
EBT= 20,000,000
EBIT= EBT + Interest
EBIT= 20,000,000 + 2,000,000
EBIT= 22,000,000
Now, we can determine D and A:
D and A= EBITDA - EBIT
DA= 25,000,000 - 22,000,000
DA= 3,000,000
The largest national herbal supplement store is running a sale on its excess supply of Vitamin C supplements. With this new price change what do you think will happen to the Vitamin C supplement market? a. There will be a shift if the demand curve as demand increases. b. There will be an increase only in the quantity demanded. c. There will be a decrease in the quantity demanded. d. There will be a shift in the supply curve as supply increases.
Answer:
b. There will be an increase only in the quantity demanded.
Explanation:
The law of demand states that the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.
So if there's a sale, vitamin c would become cheaper and the quantity demanded would increase. This would lead to a movement along the demand curve and not a shift.
I hope my answer helps you
