Answer:
Fran Bowen
Budget Vs Actual, Variance and Status:
Budget Actual Variance Status
Food $ 364 $331 $33 Surplus
Clothing 164 161 3 Surplus
Transportation 408 416 -8 Deficit
Personal expenses and recreation 307 259 48 Surplus
Housing 994 1,046 -52 Deficit
Total $2,237 $2,213 $24 Surplus
Explanation:
a) Data and Calculations:
Budget Actual Variance Status
Food $ 364 $331 $33 Surplus
Clothing 164 161 3 Surplus
Transportation 408 416 -8 Deficit
Personal expenses and recreation 307 259 48 Surplus
Housing 994 1,046 -52 Deficit
Total $2,237 $2,213 $24 Surplus
b) The difference between the estimated budget cost and the actual cost spent on each item gives rise to either surplus or deficit. This surplus or deficit is described as the variance. It is surplus when the budgeted cost is greater than the actual cost spent. It is deficit when the budgeted cost is less than the actual cost spent.
Longmire & Sons made sales on credit to Alderman Sports totaling $500,000 on April 18. The cost of the goods sold is $400,000. Longmire estimates 3% of its sales to Alderman may be returned. On May 22, $9,000 worth of goods (with a cost of $7,200) are returned by Alderman. Assume Longmire uses a perpetual inventory system.
Required:
Prepare the related journal entries for Longmire & Sons.
Answer:
April 18
Dr Account receivable 500,000
Cr Cash 500,000
April 18
Dr Cost of goods sold 400,000
Cr Merchandize inventory 400,000
May 22
Dr Sales return and allowance 9,000
Cr Account receivable 9,000
May 22
Dr Merchandize inventory 7,200
Cr Cost of goods sold 7,200
Explanation:
Preparation of the related journal entries for Longmire & Sons.
Based on the information given the related journal entries for Longmire & Sons will be :
April 18
Dr Account receivable 500,000
Cr Cash 500,000
(Being to record credit sales)
April 18
Dr Cost of goods sold 400,000
Cr Merchandize inventory 400,000
(Being to Record cost of goods sold)
May 22
Dr Sales return and allowance 9,000
Cr Account receivable 9,000
(Being to record goods return)
May 22
Dr Merchandize inventory 7,200
Cr Cost of goods sold 7,200
(Being to Record cost of goods return)
You have decided to invest $15,000 in a money market fund that pays you interest at the annual rate of 6% and compounds interests monthly. Your plan is to take out your money in a year and pay taxes on the interest earned. If the corresponding tax rate is 20%, how much money in total will you expect to receive in a year after paying taxes.
Answer:
$15,869.66
Explanation:
The formula for determining the future value of the amount invested is :
FV = PV x (1 + r / m)^mn
FV = Future value
PV = Present value
R = interest rate
N = number of years
m = number of compounding
$15,000 x (1+ 0.06/12)^12 = $15,925.17
Interest earned = future value - present value
$15,925.17 - $15,000 = $925.17
Tax paid on interest earned = 0.06 x $925.17 = $55.51
Interest after taxes = $925.17 - $55.51 = $869.66
Total amount expected = $15,000 + $869.66 = $15,869.66
Conrad, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records.
Cost of Goods Sold $ 65,000
Work-in-Process Inventory, Beginning 10,500
Work-in-Process Inventory, Ending 9,000
Selling and Administrative Expense 15,000
Finished Goods Inventory, Ending 15,000
Finished Goods Inventory, Beginning?
Direct Materials Used ?
Factory Overhead Applied 12,000
Operating Income 14,000
Direct Materials Inventory, Beginning 11,000
Direct Materials Inventory, Ending 6,000
Cost of Goods Manufactured 60,000
Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Fisher, Inc. has asked you to recalculate the following accounts and to report to him by the end of the day. What is the amount of direct materials used?
Answer:
See below
Explanation:
Direct materials used = Cost of goods manufactured - work in process inventory, beginning - factory overhead applied - direct labor + work in process inventory, ending
= $60,000 - $10,500 - $12,000 - (1.5 × $12,000) + $9,000
=
Compare and by converting their income statements to common size. Martinez Rojo Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . $10,900 $19,536 Cost of goods sold. . . . . . . . . . . . . . . . . . 6,660 14,203 Other expense. . . . . . . . . . . . . . . . . . . 3,564 4,356 Net income. . . . . . . . . . . . . . . . . . . . . . . . . $676 $977 Which company earns more net income? Which company's net income is a higher percentage of its net sales?
Answer:
a. Rojo
b. Martinez
Explanation:
When converting the income statement to common size, everything is made a percentage of net sales.
Martinez Rojo
Net Sales 100% 100%
Cost of goods sold (61.1% ) ( 72.7%)
Other expenses (32.7% ) ( 22.3%)
Net Income 6.2% 5.0%
Working
Martinez Rojo
Cost of goods 6,660/10,900 14,203/19,536
Other expenses 3,564/10,900 4,365/19,536
Net income 676/10,900 977/19,536
a. Company with more Net income
= Rojo
b. Company with higher net income as percentage of net sales
= Martinez
What type of hazard could occur by wearing jewelry while preparing food
Answer:
it can fall into the food
An analysis of the company's insurance policies provided the following facts.
Policy Date of Purchase Months of Coverage Cost
A April 1, 2017 24 $10,824
B April 1, 2018 36 9,576
C August 1, 2019 12 8,424
The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)
Required:
So what would my adjusting journal entry be?
Answer:
Adjusting Journal in the year of payment:
December, 2017: Policy A
Debit Insurance Expense $4,059
Credit Prepaid Insurance $4,059
To record the insurance expense for the year (9 months).
December, 2018: Policy A and B
Policy A:
Debit Insurance Expense $5,412
Credit Prepaid Insurance $5,412
To record insurance expense for the year, 12 months.
Policy B:
Debit Insurance Expense $2,394
Credit Prepaid Insurance $2,394
To record insurance expense for the year, 9 months.
December, 2019:
Policy A:
Debit Insurance Expense $1,353
Credit Prepaid Insurance $1,353
To record insurance expense for the year, 3 months.
Policy B:
Debit Insurance Expense $3,192
Credit Prepaid Insurance $3,192
To record insurance expense for the year, 12 months.
Policy C:
Debit Insurance Expense $3,510
Credit Prepaid Insurance $3,510
To record insurance expense for the year, 5 months.
Explanation:
a) Data and Calculations:
Policy Date of Purchase Months of Cost Monthly
Coverage Cost
A April 1, 2017 24 $10,824 $451 ($10,824/24)
B April 1, 2018 36 9,576 $266 ($9,576/36)
C August 1, 2019 12 8,424 $702 ($8,424/12)
b) The insurance expenses recorded under the three policies have been determined using the monthly rates. In each year, the months covered are taken into consideration when computing the insurance expense for the year. In this way, only the expenses incurred for the period are accounted for, in accordance with the accrual concept of accounting.
On January 1, 2020, Marigold Corp. purchased a machine costing $355000. The machine is in the MACRS 5-year recovery class for tax purposes and has an estimated $74000 salvage value at the end of its economic life. It's based on half year convention. Assuming the company uses the general MACRS approach, the amount of MACRS deduction for tax purposes for the year 2020 is
Answer:
$71,000
Explanation:
Note: The MARCS Table is attached below
Depreciation for 2020 = Cost*Rate%
Depreciation for 2020 = $355000*20%
Depreciation for 2020 = $71,000.
Note: MACRS depreciation disregards the salvage value and depreciates the asset to zero over the life of the asset.
An investor is in the 33 percent tax bracket and pays long-term capital gains taxes of 15 percent. What are the taxes owed (or saved in the case of losses) in the current tax year for each of the following situations?
a) Net short-term capital gains of $3,000; net long-term capital gains of $4,000
b) Net short-term capital gains of $3,000; net long-term capital losses of $4,000
c) Net short-term capital losses of $3,000; net long-term capital gains of $4,000
d) Net short-term capital gains of $3,000; net long-term capital losses of $2,000
e) Net short-term capital losses of $4,000; net long-term capital gains of $3,000
f) Net short-term capital losses of $1,000; net long-term capital losses of $1,500
g) Net short-term capital losses of $3,000; net long-term capital losses of $2,000
Answer:
The taxes owed (or saved in the case of losses) in the current tax year for each of the following situations) are:
Taxes owed Taxes saved
a. $1,590 $0
b. $0 $1,000
c. $150 $0
d. $0 $1,000
e. $0 $1,000
f. $0 $2,500
g. $0 $5,000
Explanation:
a) Data:
Investor's tax bracket = 33% (same as the short-term capital gains taxes)
Long-term capital gains taxes = 15%
b) Events and Calculations:
a) Net short-term capital gains of $3,000; net long-term capital gains of $4,000
Short-term tax = $990 ($3,000*33%)
Long-term tax = $600 ($4,000*15%)
Total taxes = $1,590
b) Net short-term capital gains of $3,000; net long-term capital losses of $4,000
Long-term capital losses = $4,000
Short-term capital gains = (3,000)
Savings = $1,000
c) Net short-term capital losses of $3,000; net long-term capital gains of $4,000
Long-term capital gains = $4,000
Short-term capital losses (3,000)
Long-term capital gains taxes = $150 ($1,000 * 15%)
d) Net short-term capital gains of $3,000; net long-term capital losses of $2,000
Short-term capital gains = $3,000
Long-term capital losses (2,000)
Savings = $1,000
e) Net short-term capital losses of $4,000; net long-term capital gains of $3,000
Short-term capital losses = $4,000
Long-term capital gains (3,000)
Savings $1,000
f) Net short-term capital losses of $1,000; net long-term capital losses of $1,500
Short-term capital losses = $1,000
Long-term capital losses 1,500
Savings = $2,500
g) Net short-term capital losses of $3,000; net long-term capital losses of $2,000
Short-term capital losses = $3,000
Long-term capital losses 2,000
Savings = $5,000
On January 1, 2012, Sunland Company purchased for $690000, equipment having a useful life of ten years and an estimated salvage value of $40200. Sunland has recorded monthly depreciation of the equipment on the straight-line method. On December 31, 2020, the equipment was sold for $160000. As a result of this sale, Sunland should recognize a gain of
Answer:
$54,820
Explanation:
The computation of the gain is shown below;
But before that following calculations must be done
Annual depreciation as per the straight-line method
= ($690,000 - $40,200) ÷ (10 years)
= $64,980
Now accumulated depreciation for 9 years is
= $64,980 × 9 years
= $584,820
Now the book value is
= $690,000 - $584,820
= $105,180
Now the gain is
= Sale value - book value
= $160,000 - $105,180
= $54,820
Don James purchased a new automobile for $21,000. Don made a cash down payment of $5,250 and agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of purchase. Financing is available at a 24% annual interest rate.
Required:
Calculate the amount of the required monthly payment.
Answer:
monthly payment. = $703.24 per month
Explanation:
given data
Cost of auto = $21000
Cash Down payment = $5250
Loan amount = PV = 21000-5250
loan amount = $15,750
time period = 30 monthly
Rate = 24% pa = 24÷12 = 2% pm
solution
we get here monthly payment that is express as
monthly payment. = [tex]\frac{P\times r\times (1+r)^n}{(1+r)^n-1}[/tex] ...................1
put here value and we get
monthly payment. = [tex]\frac{15750\times 0.02\times (1+0.02)^{30}}{(1+0.02)^{30}-1}[/tex]
solve it we get
monthly payment. = $703.24 per month
3. You are considering investing in a startup company called Minions Technologies. After careful analysis, you determine that Minions will be able to generate $100,000 in cash flow at the end of each year for the first 5 years. Then, Minions will generate cash flow of $400,000 at the end of the 6th year, after which it will grow at 11% per year forever. Using a discount rate of 18%, what is the amount you would be willing to invest
Answer:
$2,810,467
Explanation:
we need to determine the enterprise value of Minions Technologies
first, the terminal value at year 5 = $400,000 / (18% - 11%) = $5,714,286
then we must find the present value of all future cash flows, including the terminal value
PV of 5 five cash flows = $100,000 x 3.127 (PV annuity factor, 18%, 5 periods) = $312,700
PV of terminal value = $5,714,286 / 1.18⁵ = $2,497,767
total enterprise value = $2,810,467
Melissa is an unmarried person who earns a salary of $54,000 per year and has $500 of interest income. Her itemized deductions total $2,500. She is able to use a non-refundable credit of $400. She has $5,000 of federal income taxes withheld from her wages. What is the amount of Melissa's REFUND OR TAX DUE FOR 2020
Answer:
$6150
Explanation:
These are the details of Melissa's income
Salary = $54000
Interest income = 500
Itemized deductions = $ 2500
Non refundable credit = $400
Withheld federal income tax = $5000
We have to calculate the amount of her tax return for year 2020
Taxable income = 54000+500-2500
= $52500
Tax rate 22%
Tax on taxable income = 52500x0.22
= 11550
Minus non refundable credit = 11550-400
Minus federal tax withheld = 11550-400-5000
= $6150
One current answer to the historical struggle within management to balance the things of production and the humanity of production is social business, including the use of social media. Please indicate if the social media benefits listed below aid a thing of production or the humanity of production. Social media benefit Thing of production Humanity of production Improve efficiency Facilitate collaboration
Answer:
Humanity of production
Explanation:
List at least one of each transaction related to all of the following business events:
a. Purchase of goods or services for cash
b. Providing services for cash
c. Providing services on account
d. Purchase of goods or services on account
e. Payment of a previously recorded expense
f. Receipt of a previously recorded revenue earned
Answer:
a. Purchase of goods or services for cash
Transaction: Cash paid towards the dresses and shoes for security guards.
Accounts affected: Cash and Purchases
b. Providing services for cash
Transaction: Cash received against Bill raised towards Security services to M/s Major Computers for November month
Accounts affected: Cash and Service Revenues
c. Providing services on account
Transaction: Bill raised towards Security services to M/s Prime innovators for November month
Accounts affected: Accounts Receivables and Service Revenues
d. Purchase of goods or services on account
Transaction: Purchases the dresses and shoes for security guards on credit form M/s Immediate Dress.
Accounts affected: Accounts Payable and Purchases
e. Payment of a previously recorded expense
Transaction: Payment of bill raised by M/s Immediate Dress towards purchase of security guards dresses and shoes last month.
Accounts affected: Accounts Payable and Cash
f. Receipt of a previously recorded revenue earned
Transaction: Received payments towards Bill raised to M/s Prime innovators for Security services for November month
Accounts affected: Accounts Receivables and Cash
Derek will deposit $9,359.00 per year for 18.00 years into an account that earns 4.00%, The first deposit is made next year. He has $18,418.00 in his account today. How much will be in the account 49.00 years from today
Answer:
FV= $904,322.05
Explanation:
First, we will calculate the future value of the 18 deposits 19 years from now. Also the value of the $18,418 19 years from now.
FV= {A*[(1+i)^n-1]}/i
A= annual deposit= 9,359
n= 18
i= 0.04
FV= {9,359*[(1.04^18) - 1]} / 0.04
FV= $240,015.42
FV= PV*(1+i)^n
FV= 18,418*(1.04^19)
FV= $38,803.95
Total FV= 240,015.42 + 38,803.95= $278,819.37
Finally, the value of the account for the remaining 30 years:
FV= 278,819.37*(1.04^30)
FV= $904,322.05
Lincoln Company purchased merchandise from Grandville Corp. on September 30, 2021. Payment was made in the form of a noninterest-bearing note requiring Lincoln to make six annual payments of $4,400 on each September 30, beginning on September 30, 2024. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your final answer to nearest whole dollar amount.) Required: Calculate the amount at which Lincoln should record the note payable and corresponding purchases on September 30, 2021, assuming that an interest rate of 9% properly reflects the time value of money in this situation.
Answer: $16,613
Explanation:
As the noninterest-bearing note required Lincoln to make six annual payments of $4,400, this is an annuity because it is a constant figure.
The amount that should be recorded is the present value of this amount.
Present value of annuity = Annuity * ( 1 - ( 1 + rate) ^ -no. of periods) / rate
= 4,400 * ( 1 - ( 1 + 9%)⁻⁶) / 9%
= $19,738
This present value is for September 30, 2023. It needs to be discounted further to September 30, 2021.
= 19,738 / (1 + 9%)²
= $16,613
At the beginning of the year, Cann Co. started construction on a new $2 million addition to its plant. Total construction expenditures made during the year were $200,000 on January 2, $600,000 on May 1, and $300,000 on December 1. On January 2, the company borrowed $500,000 for the construction at 12%. The only other outstanding debt the company had was a 10% interest rate, long-term mortgage of $800,000, which had been outstanding the entire year. What amount of interest should Cann capitalize as part of the cost of the plant addition
Answer:
$72,500
Explanation:
The computation of the amount of interest capitalized is as follows:
= ($500,000 × 12%) + ($625,000 - $500,000) × 10%
= $60,000 + $12,500
= $72,500
The Average expenditure for the year is
= ($200,000 × 12 ÷ 12) + ($600,000 × 8 ÷ 12) + ($300,000 × 1 ÷ 12)
= $200,000 + $400,000 + $25,000
= $625,000
A motel had the following business on a particular week. Number Occupied Type of room Sun Mon Tues Wed Thu Fri Sat Rate per night Nightly 60 60 60 60 60 $80 5-day Week 90 90 90 90 90 $64 7-day Week 50 50 50 50 50 50 50 $48 Weekend only 130 130 $56 If there are 200 rooms and the operating costs are $20,000 plus a cleaning fee of $5 per room per day, compute the profit during the one-week period. Group of answer choices $57,360 $57,059 $64,160 $64,160
Answer:
Total profit for week = $57360
Explanation:
To calculate the profit for one-week period, we first need to calculate the revenue for one week period based on the given occupancy.
We will first calculate the revenue for every day and add it to calculate the revenue for the week.
Sunday = 60 * 80 + 90 * 64 + 50 * 48 => $12960
Monday = 60 * 80 + 90 * 64 + 50 * 48 => $12960
Tuesday = 60 * 80 + 90 * 64 + 50 * 48 => $12960
Wednesday = 60 * 80 + 90 * 64 + 50 * 48 => $12960
Thursday = 60 * 80 + 90 * 64 + 50 * 48 => $12960
Friday = 50 * 48 + 130 * 56 => $9680
Saturday = 50 * 48 + 130 * 56 => $9680
Total revenue for one week = 12960 * 5 + 9680 * 2 => $84160
To calculate the profit, we will first calculate the total cost.
Total cost = 20000 + (5 * 200 * 5 + 5 * 180 * 2)
Total cost = $26800
Total profit for week = 84160 - 26800
Total profit for week = $57360
Mohawk Machining, which uses a process-costing system, adds material at the beginning of production and incurs conversion cost evenly throughout manufacturing. The following selected information was taken from the company's accounting records: Total equivalent units of materials: 8,000 Total equivalent units of conversion: 7,400 Units started and completed during the period: 6,500 On the basis of this information, the ending work-in-process inventory's stage of completion is:_____.
A- 80%.
B- 70%.
C- 60%. - 40%.
D- some other percentage not listed above.
Answer:
C. 60%
Explanation:
Equivalent unit of Materials = 8,000.00
Equivalent unit of Conversion = 7,400.00
Units started and completed = 6,500.00
Since Materials are entered in the beginning it means that out of 8000 Units of Materials 6500 units are in Units started and completed and remaining 1500 Units are in Closing inventory. It also means that 1500 units are in Closing Inventory of Conversion and Equivalent production of conversion part of 1500 Units are 900 Units (7400-6500).
Let % Completion be x
X% of 1500 = 900
X = 900*100/1500
X = 60%.
Great Harvest Bakery purchased bread ovens from New Morning Bakery. New Morning Bakery was closing its bakery business and sold its two-year-old ovens at a discount for $700,000. Great Harvest incurred and paid freight costs of $35,000, and its employees ran special electrical connections to the ovens at a cost of $5,000. Labor costs were $37,800. Unfortunately, one of the ovens was damaged during installation, and repairs cost $5,000. Great Harvest then consumed $900 of bread dough in testing the ovens. It installed safety guards on the ovens at a cost of $1,500 and placed the machines in operation.
Prepare a schedule showing the amount at which the ovens should be recorded in Great Harvest's Equipment account.
Answer:
Particulars Amount
Purchase price $700,000
Add: Freight cost $35,000
Add: Electrical connections $5,000
Add: Labor costs $37,800
Add: Bred dough used $900
Add: Safety guards $1,500
Total cost of Equipment $780,200
Note: Repairs cost of $5,000 will not be included
Marge owns land and a building (held for investment) with an adjusted basis of $75,000 and a fair market value of $250,000. The property is subject to a mortgage of $400,000. Because Marge is in arrears on the mortgage payments, the creditor is willing to accept the property in return for canceling the amount of the mortgage.
a. How can the adjusted basis of the property be less than the amount of the mortgage?
b. If the creditor's offer is accepted, what are the effects on the amount realized, the adjusted basis, and the realized gain or loss for Marge?
c. Does it matter in (b) if the mortgage is recourse or nonrecourse?
Answer:
A. The amount deducted for Depreciation may be higher than the amortized amount of the mortgage principal.
Decrease in the value of the property after they granted the mortgage
Bi $400,000
ii. $75,000
iii. $325,000
C.No
Explanation:
a. The adjusted basis of the property can be tend to be lesser than the amount of the mortgage due to the fact that in the beginning of an asset life the amount that was deducted for Depreciation may be more higher than the amortized amount of the mortgage principal .
Secondly the adjusted basis of the property can be tend to be lesser than the amount of the mortgage when their is Decrease in the value of the property after they granted the mortgage .
Lastly the adjusted basis of the property can be tend to be lesser than the amount of the mortgage when the fair market value of Property are been given instead of the Adjusted basis of the property.
b. Calculation for the effects on the amount realized, the adjusted basis, and the realized gain or loss for
i. Based on the information given the amount that was realized will be the amount of $400,000
ii. Based on the information given the Adjusted basis will be the amount of $75,000
iii. Realized gain=$400,000 − $75,000
Realized gain= $325,000
c.No it don't not matter if the mortgage is recourse or nonrecourse since the amount that was realized was the amount of $400,000 and
to justify the nonrecourse mortgage is that the taxpayer has already enjoy some benefit when the mortgage was acquired due to the increase in Adjusted basis of the property.
in 2001 an outbreak of hoof-and-mouth disease in europe led to the burning of millions of cattle carcasses. discuss the demand and supply implication caused by the outbreak, for an in-depth analysis of the discussion topic you may use all of the resources available to you. what impact would you expect on the supply of cattle hides, hide prices, the supply of leather goods, and the price of leather goods
Answer:
High demand
Low supply
High prices
Explanation:
The demand and supply of products, goods and services is heavily dependent on several factors ranging from economic, health and social factors. Disease and viral outbreaks have devastating effects on the market forces of demand and supply which in most cases will impact the market negatively with characteristically high prices and scarcity of products. The mouth and hoof outbreak in Europe was one which impacted the economy including farmers, leather and hides workers and all whose businesses and sustainability depends on cattles and its products. Due to the contagious nature of the disease and the ease at which it could spread if curtailment isn't effected on time, millions of cattles were slaughtered on sighting the symptoms and it's products including skins are burnt leading to losses in billions on the path of cattle rearers, shortage of lather, hides and skins, restriction in international product trade in other to avoid its spread to other parts of the world. These resulted in low supply and high demand of cattles and its products including leather goods meaning High prices for little available.
Because your patented Gidgit is starting to gain attention and investors are starting to show interest, the executive committee is considering becoming a publicly held company by selling the company to the government.
True
False
Answer:
False.
Explanation:
Patent can be defined as the exclusive or sole right granted to an inventor by a sovereign authority such as a government, which enables him or her to manufacture, use, or sell an invention for a specific period of time.
Generally, patents are used on innovation for products that are manufactured through the application of various technologies.
Basically, the three (3) main ways to protect an intellectual property is to employ the use of trademarks, copyright and patents.
In this scenario, Because your patented Gidgit is starting to gain attention and investors are starting to show interest, the executive committee is considering becoming a publicly held company.
Since Gidgit is patented it cannot be sold to the government because it is a registered intellectual property that cannot be used or sold without the approval or consent of the owner.
Emilio’s accountant told him that if he continues to pay $50 a month on his credit card, it will take him 42 years to pay off his current balance (assuming the interest rate doesn’t change and assuming he doesn’t charge anything else on that card). His credit card interest rate is 18.99%. What is his balance?
Answer:
$3,158.40
Explanation:
The current balance on his credit card is the present value of $50 payable per month over 42-year period as shown below:
PV=monthly payment*(1-(1+r)^-n/r
PV=the unknown
montly paymet=$50
r=monthly interest rate= 18.99%/12=0.015825
n=number of monthly payments=42*12=504
PV=$50*(1-(1+0.015825)^-504/0.015825
PV=$50*(1-(1.015825)^-504/0.015825
PV=$50*(1-0.000365827)/0.015825
PV=$50*0.999634173/0.015825
PV=$3,158.40
Billed Mercy Co. $2,400 for services performed.
how to journalize this?
When a business transaction requires a journal entry, we must follow these rules:
The entry must have at least 2 accounts with 1 DEBIT amount and at least 1 CREDIT amount.
The DEBITS are listed first and then the CREDITS.
The DEBIT amounts will always equal the CREDIT amounts.
For another example, let’s look at the transaction analysis we did in the previous chapter for Metro Courier (click Transaction analysis):
1. The owner invested $30,000 cash in the corporation. We analyzed this transaction by increasing both cash (an asset) and common stock (an equity) for $30,000. We learned you increase an asset with a DEBIT and increase an equity with a CREDIT. The journal entry would look like this:
2. Purchased $5,500 of equipment with cash. We analyzed this transaction as increasing the asset Equipment and decreasing the asset Cash. To increase an asset, we debit and to decrease an asset, use credit. This journal entry would be:
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Answer:
All the journal entries illustrated so far have involved one debit and one credit; these journal entries are called simple journal entries. Many business transactions, however, affect more than two accounts. The journal entry for these transactions involves more than one debit and/or credit. Such journal entries are called compound journal entries.
Explanation:
1. The owner invested $30,000 cash in the corporation. We analyzed this transaction by increasing both cash (an asset) and common stock (an equity) for $30,000. We learned you increase an asset with a DEBIT and increase an equity with a CREDIT
2. Purchased $5,500 of equipment with cash. We analyzed this transaction as increasing the asset Equipment and decreasing the asset Cash. To increase an asset, we debit and to decrease an asset, use credit.
3. Purchased a new truck for $8,500 cash. We analyzed this transaction as increasing the asset Truck and decreasing the asset Cash. To increase an asset, we debit and to decrease an asset, use credit.
4. Purchased $500 in supplies on account. We analyzed this transaction as increasing the asset Supplies and the liability Accounts Payable. To increase an asset, we debit and to increase a liability, use credit.
5. Paid $300 for supplies previously purchased. Since we previously purchased the supplies and are not buying any new ones, we analyzed this to decrease the liability accounts payable and the asset cash. To decrease a liability, use debit and to decrease and asset, use debit.
6. Paid February and March Rent in advance for $1,800. When we pay for an expense in advance, it is an asset. We want to increase the asset Prepaid Rent and decrease Cash. To increase an asset, we debit and to decrease an asset, use credit.
7. Performed work for customers and received $50,000 cash. We analyzed this transaction to increase the asset cash and increase the revenue Service Revenue. To increase an asset, use debit and to increase a revenue, use credit.
8. Performed work for customers and billed them $10,000. We analyzed this transaction to increase the asset accounts receivable (since we have not gotten paid but will receive it later) and increase revenue. To increase an asset, use debit and to increase a revenue, use credit.
9. Received $5,000 from customers from work previously billed. We analyzed this transaction to increase cash since we are receiving cash and we want to decrease accounts receivable since we are receiving money from customers who we billed previously and not new work we are doing. To increase an asset, we debit and to decrease an asset, use credit.
10 Paid office salaries $900. We analyzed this transaction to increase salaries expense and decrease cash since we paid cash. To increase an expense, we debit and to decrease an asset, use credit.
11. Paid utility bill $1,200. We analyzed this transaction to increase utilities expense and decrease cash since we paid cash. To increase an expense, we debit and to decrease an asset, use credit.
Tirri Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 7.50 Direct labor $ 3.85 Variable manufacturing overhead $ 1.55 Fixed manufacturing overhead $ 24,400 Sales commissions $ 1.05 Variable administrative expense $ 0.60 Fixed selling and administrative expense $ 8,800 If the selling price is $28.10 per unit, the contribution margin per unit sold is closest to:
Answer:
$13.55
Explanation:
The contribution margin per unit is computed as;
= Selling price - (Direct materials + Direct labor + Variable manufacturing overhead + Sales commission + Variable administrative expense)
= $28.10 - ($7.50 + $3.85 + $1.55 + $1.05 + $0.60)
= $28.10 - $14.55
= $13.55
Therefore , the contribution margin per unit is $13.55
