Answer:B
Explanation:
Happy Hands will not charge a price that is exactly equal to the marginal cost, which is the likely outcome for Happy Hands. Therefore option B is correct.
What is Monoplantic?Possessing or attempting to have total control over anything, especially over a business area, without allowing others to participate: She didn't think the fine was enough to stop monopolistic behavior by large producers. The business is charged with monopolistic behavior. Look up the monopoly.
Monopolistic competition has the following characteristics:
The existence of numerous businesses
Each business creates things that are comparable but different.
Companies do not accept prices.
Free admission and exit from the sector Businesses compete on the basis of the goods' quality, cost, and marketing strategy
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Assume there is a decrease in the market demand for a good sold by price-taking firms that are initially producing the profit-maximizing level of output. How will the market adjust over time? Firms will exit the market, causing price to fall until positive profits are eliminated. Firms will exit the market, causing price to rise until losses are eliminated. Firms will enter the market, causing price to rise until losses are eliminated. Firms will enter the market, causing price to fall until positive profits are eliminated.
Answer: Firms will exit the market, causing price to rise until losses are eliminated
Explanation:
When there is a decrease in demand in a Perfectly Competitive Market, firms will have to start producing at a lower Quantity to manage their Marginal cost. This leads to Economic losses on their part in the short run.
In the long run however, should the situation remain the same, the new price would be less than their Average Cost which would deepen Economic losses. Firms would respond by exiting the market in the long run.
As the firms exit, the supply curve shifts left as supply drops. This drop in supply leads to a price rise. The exits will continue until enough firms leave that the market's remaining firms will stop suffering economic losses.
Indicate whether each of the following is either True/Fasle:
1. An S Corporation is a taxpaying entity.
2. If shareholders elect S Corporation status, the corporation generally pays no tax.
3. Stock received by a transferor in exchange for services does not count in determining whether the 80% control test has been met.
4. Under Sec. 351, no gain or loss is recognized by those who exchange property solely for stock of the recipient corporation.
5. When boot is received by a taxpayer transferring assets in a Sec. 351 exchange, gain must be recognized to the extent of the smaller of the realized gain or the FMV of the boot received.
Answer:
The following are the answers,
False - S organization could be a taste unit which suggests all the financial gain of the S company are going to be relocated to stockholders and also the tax is to be compensated by the stockholders and not the S organization. True – As per constant rationalization on top of you'll be able to settle this. False – Stock acknowledged on either methodology are going to be enclosed for control purpose. True – The profit or loss is merely predictable once the transmission isn't for sole perseverance. True - When boot is acknowledged by a remunerator shifting possessions in a very Sec. 351 discussion, gain should be documented to the level of the lesser of the complete expansion
In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 150 units at $7 on January 1, (2) 590 units at $8 on January 8, and (3) 890 units at $10 on January 29. M7-12 Calculating Cost of Goods Available for Sale, Cost of Goods Sold, and Ending Inventory under Periodic LIFO [LO 7-3] Assume 1,110 units are on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and cost of goods sold under the LIFO. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places.
Answer:
Goods available for sale = $14,670
Ending inventory = $9,470
Cost of goods sold = $5,200
Explanation:
As per the data given in the question,
Total units purchased = 150 + 590 + 890 = 1,630
Ending inventory = 1,110
Sales units = 1,630 units - 1,110 units = 520 units
Goods available for sale = 150 × $7 + 590 × $8 + 890 × $10
= $14,670
Ending inventory = 150 × $7 + 590 × $8 + 370 × $10
= $9,470
Cost of goods sold = $14,670 - $9,470
= $5,200
On June 30, 2021, Moran Corporation issued $13.5 million of its 8% bonds for $12.2 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2021. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021?
Answer:
$70,000
Explanation:
Moran Corporation
Semiannual interest paid on 31 Dec 2021
= $13,500,000*8%*6/12
= $540,000
Therefore If the effective interest method is used, by how much should the bond discount be reduced for the six months ended December 31, 2021 will be $70,000
Effective interest expense on 31 Dec.2021
= $12,200,000 * 10% * 6/12
= $610,000
Bond discount to be reduced for 6 months ended 31 Dec 2021
= $610,000 - $540,000
= $70,000
Ahmed, a lawyer, sold his car to Carlos. Has an implied warranty of merchantability been created by this transaction? No, because Ahmed is not a merchant. Yes, because if the car is defective Carlos will have a right to return in to Ahmed. No, Ahmed has not implied so either orally or in written. Yes, because a car is "goods" and the Uniform Commercial Code applies to contracts for the sale of goods.
Answer:
A. No, because Ahmed is not a merchant.
Explanation:
Implied warranty of merchantability is a law in contract which states that when there is a transaction between a seller (the merchant), and a buyer, there is an unwritten guarantee from the seller, that the product meets up to the ordinary standards of care. This means that the goods must be fit to do what the merchant says it will do. Therefore, if the seller finds it defective, he could return it to the seller. and if the seller refuses to make a change, a legal case could be established. The merchant by law is a wholesaler or retailer, who sells goods in which he has expertise or special skills.
Ahmed in the question could be argued in court to not be a merchant of cars and as such, has no expertise with which he can make a guarantee for the car being sold to Carlos.
[10 points] Suppose Wilwaukee Telecom offers its users the option of paying either (a) $2.00 per minute for telephone service or (b) a $125 flat charge for a year of unlimited toll-free calls. Consider a customer with an annual demand for telephone service of P = 11 – 0.1Q, where P is the price per minute and Q is the number of minutes of calls made per year. Calculate the consumer surplus for each of the plans (a) and (b).
Answer:
For plan A, P = 2.
Then from demand curve, 2 = 11-.1Q
So .1Q = 9
Q* = 90
B) under plan b, P = zero
So make 11 = .1Q
Q* = 110
Now Consumer surplus from a)
CS = .5*(11-2)*90 = ∆ABC
= .5*9*90 = 405
From b)
CS = .5*11*110 - 125 = ∆ ADE - fixed fee
= 605-125 = 480
Are monopolies economically efficient? Consider the market to the right. Compared to the perfectly competitive outcome, what would be the change in surplus if instead the market had one supplier that was a monopoly?
Answer:
Deadweight loss (Triangle between all three lines, hits all three points).
Explanation:
This is explained to be triangle between all three lines as it hits all three points involved.
It can also be explained to be Harberger's triangle in the sense that the loss occurring in the trade of a good or service due to market power of buyers or sellers or a government intervention, or other bodies concerned is lost due when it is not produced maximumly to reach everyone who meeds it.
Deadweight loss, also can be a measure of lost economic efficiency when the socially optimal quantity of a good or a service is not produced. Non-optimal production can be caused by monopoly pricing in the case of artificial scarcity, a positive or negative externality, a tax or subsidy, or a binding price ceiling or price floor such as a minimum wage.
A strategic business unit (SBU) refers to:_________.
a. a single product or service identification code used to identify items for strategic marketing planning purposes.
b. a small number of people from different departments in an organization who are mutually accountable to accomplish a task or common set of performance goals.
c. a strategic product that has a unique brand, size, or price. a privately-owned franchise under the auspices of a larger group or organization bearing the same name.
d. a subsidiary, division, or unit of an organization that markets a set of related offerings to a clearly defined group of customers.
Answer:
D.
Explanation:
Strategic Business unit is also popularly known as SBU. It is an independent entity of a large company. This entity have its own aims and visions, and operates individually but report its working to the headquarter. The aim of this entity is target market.
An example of SBU is Samsung. The company have different categories of product under one name. It is an electron company that makes phones, televisions, refrigators, camera, etc. All these sub-categories or divison of Samsung are SBU.
From the given options the correct one is D.
Money's power to buy goods and services changes ________.
Answer:
...with rates of inflation.
Explanation:
The more that a particular currency appears in the market without any work (value) being associated with that currency, the smaller the value of that particular form of currency (For example, the U.S. dollar). When inflation is high, banks will increase interest rates on loans in order to get rid of some of the of the surplus currency in the market, bringing down inflation and increasing the total value of a particular form of currency.
After a retiring from a successful business career, you would like to make a donation to your university. This donation will go into the school’s endowment pool and the returns generated from the donation will support the salary of a new professor in the business school on a perpetual basis. The university expects to earn returns of 5.5% on its endowment pool. You may assume that any distributions to support the salary will be made annually.
Part A) You can make a donation today (t=0) in the amount of $2,500,000. The first cash flow distribution from your donation to cover the professor's salary will take place in one year (at t=1). Which of the following is closest to the annual salary payment that can be made as a result of your donation?
A. $2,500,000
B. $454,545
C. $100,000
D. $137,500
Part B) After further discussions, the university determines that the employment agreement with the new professor will call for annual salary increases of 2%. Given this new requirement, and assuming the first salary distribution will still occur one year from today, what is the starting salary (at t=1) that can be supported with your $2,500,000 donation?
A. $50,000
B. $187,500
C. $140,250
D. $87,500
Answer:
Part A) D. $137,500
Part B) C. $140,250
Explanation:
Part A) The computation of annual salary payment is shown below:-
Annual salary = Donation made × Interest rate
= $2,500,000 × 5.5%
= $137,500
So, for computing the annual salary we simply multiply the donation made with interest rate.
Part B) The computation of starting salary is shown below:-
Starting salary = Annual salary + Increased annual salary
= $137,500 + 2%
= $140,250
Therefore for computing the starting salary we simply added the annual salary with increased annual salary.
Xion Co. budgets a selling price of $80 per unit, variable costs of $35 per unit, and total fixed costs of $270,000. During June, the company produced and sold 10,800 units and incurred actual variable costs of $351,000 and actual fixed costs of $285,000. Actual sales for June were $885,000. Prepare a flexible budget report showing variances between budgeted and actual results. List variable and fixed expenses separately. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance)
Answer and Explanation:
The preparation of flexible budget report is shown below:-
Xion CO.
Flexible budget report
Flexible budget Actual results Variances Favorable/
Unfavorable
Sales $864,000 $885,000 $21,000 Favorable
(10,800 × $80)
(-) Variable
cost $378,000 $351,000 $27,000 Favorable
(10,800 × $35)
Contribution $486,000 $534,000 $48,000 Favorable
(-) Fixed cost $270,000 $285,000 $15,000 Unfavorable
Net income $216,000 $249,000 $33,000 Favorable
Under the allowance method of accounting for uncollectible accounts, a. the cash realizable value of accounts receivable is greater before an account is written off than after it is written off. b. Bad Debts Expense is debited when a specific account is written off as uncollectible. c. the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off. d. Allowance for Doubtful Accounts is closed each year to Income Summary.
Answer:
c. the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off.
Explanation:
Under the allowance method of accounting for uncollectible accounts, the cash realizable value of accounts receivable in the balance sheet is the same before and after an account is written off and bad debt expenses is debited.
This means that in the period in which an account previously written off is collected, the income is unaffected.
Also, under the allowance method of accounting, total assets will remain unchanged when a particular account is being written off.
On December 31, 2017, Berclair Inc. had 560 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 168 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $1,050 million.
Also outstanding at December 31 were 30 million incentive stock options granted to key executives on September 13, 2013. The options were exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share.
Required:
a. Compute Berclair's basic and diluted earnings per share for the year ended December 31, 2018.
Answer:
Basic Earnings Per Share = $1,44
Diluted Earnings Per Share = $1,38
Explanation:
Basic Earnings Per Share = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Shares
Calculation of Earnings Attributable to Holders of Common Stock
Net income for the year ended December 31, 2018, $1,050,000,000
Less cumulative preferred stock dividend ($45,000,000)
Earnings Attributable to Holders of Common Stock $1,005,000,000
Calculation of Weighted Average Number of Common Shares
1 January Outstanding Common Shares 560,000,000
March 1 - Purchases (10/12×168,000,000) 140,000,000
October 1 - Sold (3/12×4,000,0000) (1,000,000)
Weighted Average Number of Common Shares 699,000,000
Basic Earnings Per Share = $1,005,000,000/699,000,000
= $1,44
Diluted Earnings Per Share = Adjusted Earnings Attributable to Holders of Common Stock / Adjusted Weighted Average Number of Common Shares
Calculation of Adjusted Weighted Average Number of Common Shares
Weighted Average Number of Common Shares (Basic) 699,000,000
Incentive Stock Options 30,000,000
Adjusted Weighted Average Number of Common Shares 729,000,000
Diluted Earnings Per Share = $1,005,000,000/ 729,000,000
= $1,38
Selected information from Frosty Freeze Corporation's accounting records and financial statements for 2022 is as follows ($ in millions): Cash paid to acquire machinery$34 Reacquired Peridot common stock 54 Proceeds from sale of land 93 Gain from the sale of land 54 Investment revenue received 73 Cash paid to acquire office equipment 87 In its statement of cash flows, Frosty Freeze should report net cash outflows from investing activities of: Multiple Choice $101 million. $28 million. $80 million. $33 million.
Answer:
$45 million
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
An increase in assets other than cash is an outflow of cash while an increase in liabilities is an inflow of cash.
Hence, the net cash outflows from investing activities (in $'million)
= -$34 + $93 + $73 - $87
= $45
A work center uses kanban containers that hold 200 parts. To produce enough parts to fill a container, 60 minutes of setup plus run time are needed. Moving the container to the next workstation, waiting time, processing time at the next work station, and return of the empty container take 120 minutes. There is an overall demand rate of 10 units per minute. Calculate the number of containers needed for this process.
Answer:
9 containers
Explanation:
Data given
Container holds (capacity) = 200 units
Demand rate per minute = 10 units
The computation of number of containers needed is shown below:-
Time to fill container = Setup time + Processing time
= 60 + 120
= 180 minutes
Number of containers (n) = (Demand × Time to fill container) ÷ Capacity of the container
= (10 × 180) ÷ 200
= 1,800 ÷ 200
= 9 containers
Therefore for computing the number of containers we simply applied the above formula.
Abbott Landscaping purchased a tractor at a cost of $30,000 and sold it three years later for $16,200. Abbott recorded depreciation using the straight-line method, a five-year service life, and a $4,000 residual value. Tractors are included in the Equipment account.
Assume the tractor was sold for $12,400 instead of $19,800. Record the sale.
Answer:
Debit Credit
Cash $16,200
Accumulated depreciation-equipment $15,600
Gain on sale of equipment 1,800
Equipment 30,000
(To record sale of equipment)
Explanation:
According to the given data we have the following:
Equipment=$30,000
Cash=$16,200
Therefore,The accumulated depreciation would be=($30,000-4,000)/5*3
The accumulated depreciation would be=$15,600
Therefore, the sale to record would be as follows:
Debit Credit
Cash $16,200
Accumulated depreciation-equipment $15,600
Gain on sale of equipment 1,800
Equipment 30,000
(To record sale of equipment)
Alex Company prepares its statement of cash flows using the direct method for operating activities. For the year ended December 31, 2018, Alex Company reports the following activity: Sales on account $2,100,000 Cash sales 1,110,000 Decrease in accounts receivable 915,000 Increase in accounts payable 108,000 Increase in inventory 72,000 Cost of good sold 1,575,000 What is the amount of cash collections from customers reported by Alex Company for the year ended December 31, 2018
Answer:
The amount of cash collections from customers reported by Alex company for the year ended December 31, 2018 is $4,125,000.
Explanation:
Cash collection refers to the collection of cash from from an individual or a business whom invoice has been issued to. Any invoice unpaid are noted as being outstanding.
Cash collection fomular is therefore;
Cash collection = Sales on account + Cash sales + Decrease in accounts receivable
=$2,100,000 +$1,110,000 + $915,000
=$4,125,000
An outside supplier has offered to provide the annual requirement of 7,200 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
Super corporation produces a part in the manufactures of its product. The unit cost is $21 computed as follows:
An outside supplier has offered to provide the annual requirement of 7,200 of the parts for only $13 each. The company estimates that 60% of the fixed manufacturing overhead cost above could be eliminated if the parts are purchased from the outside supplier. Assume that direct labor is an avoidable cost in this decision. Based on these data, the financial advantage (disadvantage) of purchasing the parts from the outside supplier would be:
$
Direct material 6
Direct labour 8
Variable manufacturing overhead 2
Fixed manufacturing overhead 5
Total cost 21
Answer:
Total financial advantage of buying from the supplier $43,200
Explanation:
Unit relevant variable cost of making= 6+8 +2 = 16
$
Variable cost of making ( 16× 7200) = 115,200
Variable of buying (13 ×7200) 93,600
Savings in variable cost 21,600
Savings in fixed cost (60%*72300 × 5) 21600
Total savings from buying 43,200
Total financial advantage of buying from the supplier $43,200
At the beginning of last year, Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Tari's fixed manufacturing overhead budget variance was $12,000 favorable. Its fixed manufacturing overhead volume variance was $19,200 favorable. Actual direct labor-hours for the year were 625,000. What was Tari's total standard machine-hours allowed for last year's output?
Answer:
The answer is 612800 hours
Explanation:
Solution
Recall that:
At the start of last year, Tari Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours.
At the end of the year, Tari's fixed manufacturing overhead budget variance was $12000 favorable. Its fixed manufacturing overhead volume variance was $19200 favorable. The direct actual labor-hours for the year were 625,000. What was Tari's standard total machine-hours allowed for last year's output?
Now,
The Budgeted at beginning of the year = $900,000
fixed manufacturing overhead for = 600,000 machine hours
Thus,
The Standard = $900,000 / 600,000 hours = $1.5 fixed overhead / machine/machining hour
So,
At end of year, manufacturing overhead volume was $19,200 favorable which means that,
$19200 / $1.5 = 12800 additional hours.
Total Standard Machine Allowance Allowed for output = 600,000 +12800 = 612800 hours
Therefore, Tari's total standard machine-hours allowed for last year's output is 612800 hours
If Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Its fixed manufacturing overhead volume variance was $19,200 favorable. What Tari's total standard machine-hours allowed for last year's output will be is: 612,800 machine hours
Using this formula
Total standard machine-hours=Machine -hours level of activity+ [Fixed manufacturing overhead volume variance÷(Fixed manufacturing overhead÷ Machine -hours level of activity)]
Where:
Machine -hours level of activity=600,000
Fixed manufacturing overhead volume variance=$19,200
Fixed manufacturing overhead=$900,000
Let plug in the formula
Total standard machine-hours=600,000+[$19,200÷($900,000÷600,000)]
Total standard machine-hours=600,000+($19,200÷1.5)
Total standard machine-hours=600,000+12,800
Total standard machine-hours=612,800 machine hours
Inconclusion if Tarind Corporation budgeted $900,000 of fixed manufacturing overhead and chose a denominator level of activity of 600,000 machine-hours. At the end of the year, Its fixed manufacturing overhead volume variance was $19,200 favorable. What Tari's total standard machine-hours allowed for last year's output will be is: 612,800 machine hours
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Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot. The discount is legally sufficient consideration
a. because it is a promise of something of value.
b. only if Tasty uses it.
c. only if Sports Bar adds a cash rebate.
d. under no circumstances.
Answer:
The correct answer is the option A: because it is a promise of something of value.
Explanation:
To begin with, in order to understand that the discount is legally sufficient consideration it is necessary to understand that it is due to the fact that what the company is offering is something of value for them, therefore that they decide to offer it to the other business in order to make an agreement according to the situation that they are both in. Moreover, that promise is consider to be legitim in court if it was stated in a written way in where both parties agree to the terms of use.
At the beginning of 20D, Braga Company had office supplies inventory of $800. During 20D, the company purchased office supplies amounting to $2,500 (paid for in cash and debited to office supplies inventory). At December 31, 20D, the end of the accounting year, a count of office supplies still on hand reflected $500. The adjusting entry Braga Company will record on December 31, 20D to adjust the office supplies inventory account would include a A) debit to office supplies expense for $2,800. B) debit to office supplies inventory for $2,800. C) debit to supplies expense for $2,500. D) credit to office supplies inventory for $500.
Answer:
A) debit to office supplies expense for $2,800
Explanation:
When Supplies is purchased, Debit supplies and credit Cash/Accounts payable. As Supplies are used up, debit supplies expense (with the amount used) and Credit Supplies account.
The movement in the balance of supplies at the start and end of a period is as a result of usage and purchases. While usage reduces the balance in supplies, purchases increases the balance. This may be expressed mathematically as
Opening balance + purchases - units used = closing balance
Hence,
$800 + $2500 - amount used = $500
amount used up = $800 + $2500 - $500
= $2800
Movers Company manufactures sneakers. Production of its new sneakers for the coming three months is budgeted as follows: August 28,000 September 50,000 October 33,000 Each sneaker requires 2.5 hours of direct labor time. Direct labor wages average $16 per hour. Monthly variable overhead averages $10 per direct labor hour plus fixed overhead of $4,500. What is the total overhead budgeted for the month of September
Answer:
Budgeted overhead cost =$1,250,000
Explanation:
Budgeted overhead for the month of September = Total labour hours × overhead rate per hour
Total labor hours = standard hours × budgeted production units
=2.5 hours × 40,000= 125,000
Budgeted overhead cost Total = $10× 125,000 =$1250000
Budgeted overhead cost =$1,250,000
Answer:
$1,254,500
Explanation:
Solution
Recall that:
Production of sneakers for three months budgets were :
August= 28000
September = 50,000
October = 33,000
Each sneakers requires labor time = 2.5 hours
Labor wages average = $16.
Now,
The total overhead budgeted for the month of September is calculated as follows:
The total overhead budgeted for the month of September = Variable overhead + Fixed overhead
= (50,000 units * 2.5 direct labor hours per unit * $10 per direct labor hour) + $4,500
= $1,254,500
Therefore, the total overhead budgeted for the month of September is $1,254,500
Suppose that SoS sells both versions and wants to charge different prices for different versions. What is the highest price of the bluetooth version for the high-valuation buyers? (Hint: Since low-valuation buyers will not have an incentive to buy the more expensive version, the highest price of the stripped-down version for the low-valuation buyers is equal to their willingness to pay, i.e., pL = $250)
Answer:
Check the explanation
Explanation:
Since the high valuation customers are willing to pay $500 for the Bluetooth headphones, that price should be set for the Bluetooth versions. The problem will arise if the high valuation customers shift to the stripped down version as well. However, since they care for the Bluetooth versions and stripped down versions separately, it is highly likely that they will prefer the Bluetooth headphones.
So the highest price that can be set for the Bluetooth headphones for the high value buyer will be $500.
5) If the price is set at $500 for high value customers and $250 for low value customers, total profit can be given as
Profit = 1,000,000 * (250 - 100) + 800,000 * (500 - 100)
Profit = 150,000,000 + 320,000,000 = $470 million
On November 1, 20Y9, Lexi Martin established an interior decorating business, Heritage Designs. During the month, Lexi completed the following transactions related to the business:
Nov.
1 Lexi transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $50,000.
1 Paid rent for period of November 1 to end of month, $4,000.
6 Purchased office equipment on account, $15,000.
8 Purchased a truck for $38,500 paying $5,000 cash and giving a note payable for the remainder.
10 Purchased supplies for cash, $1,750.
12 Received cash for job completed, $11,500.
15 Paid annual premiums on property and casualty insurance, $2,400.
23 Recorded jobs completed on account and sent invoices to customers, $22,300.
24 Received an invoice for truck expenses, to be paid in November, $1,250.
Enter the following transactions on Page 2 of the two-column journal:
Nov.
29 Paid utilities expense, $4,500.
29 Paid miscellaneous expenses, $1,000.
30 Received cash from customers on account, $9,000.
30 Paid wages of employees, $6,800.
30 Paid creditor a portion of the amount owed for equipment purchased on November 6, $3,000.
30 Paid dividends, $2,500.
Required:
1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the chart of accounts in selecting the accounts to be debited and credited.
2. Refer to the Chart of Accounts for exact wording of account titles.
Answer:
Explanation:
(1) Journalizing the Transactions:-
Heritage Designs
General Journal
For the Month of November,20Y9
Date Accounts Debit Credit
Nov. 1 Cash $50,000
Common Stock $50,000
Nov. 1 Rent Expense $4,000
Cash $4,000
Nov. 6 Office Equipment $15,000
Accounts Payable $15,000
Nov. 8 Truck $38,500
Cash $5,000
Notes Payable $33,500
Nov. 10 Supplies $1,750
Cash $1,750
Nov. 12 Cash $11,500
Fees Earned $11,500
Nov. 15 Prepaid Insurance $2,400
Cash $2,400
Nov. 23 Accounts Receivable $22,300
Fees Earned $22,300
Nov. 24 Truck Expense $1,250
Cash $1,250
Nov. 29 Utilities Expense $4,500
Cash $4,500
Nov. 29 Miscellaneous Expense $1,000
Cash $1,000
Nov. 30 Cash $9,000
Accounts Receivable $9,000
Nov. 30 Wages Expense $6,800
Cash $6,800
Nov. 30 Accounts Payable $3,000
Cash $3,000
Nov. 30 Dividends $2,500
Cash $2,500
(2) Posting the each Transaction into General Ledger:-
Cash
Date Items Debit Credit Balance
Nov. 1 Common Stock $50,000 $50,000
Nov. 1 Rent Expense $4,000 $46,000
Nov. 8 Truck $5,000 $41,000
Nov. 10 Supplies $1,750 $39,250
Nov. 12 Fees Earned $11,500 $50,750
Nov. 15 Prepaid Insurance $2,400 $48,350
Nov. 24 Truck Expense $1,250 $47,100
Nov. 29 Utilities Expense $4,500 $42,600
Nov. 29 Miscellaneous Expense $1,000 $41,600
Nov. 30 Accounts Receivable $9,000 $50,600
Nov. 30 Wages Expense $6,800 $43,800
Nov. 30 Accounts Payable $3,000 $40,800
Nov. 30 Dividends $2,500 $38,300
Accounts Receivable
Date Items Debit Credit Balance
Nov. 23 Fees Earned $22,300 $22,300
Nov. 30 Cash $9,000 $13,300
Supplies
Date Items Debit Credit Balance
Nov. 10 Cash $1,750 $1,750
Prepaid Insurance
Date Items Debit Credit Balance
Nov. 15 Cash $2,400 $2,400
Equipment
Date Items Debit Credit Balance
Nov. 6 Accounts Payable $15,000 $15,000
Truck
Date Items Debit Credit Balance
Nov. 8 Cash $5,000 $5,000
Nov. 8 Notes Payable $33,500 $38,500
Notes Payable
Date Items Debit Credit Balance
Nov. 8 Truck $33,500 $33,500
Accounts Payable
Date Items Debit Credit Balance
Nov. 6 Equipment $15,000 $15,000
Nov. 30 Cash $3,000 $12,000
Common Stock
Date Items Debit Credit Balance
Nov. 1 Cash $50,000 $50,000
Dividends
When I called about the cost of these items, it was implied that my total would only be $35.00
Answer:
Each Item Cost 11.6666667
Explanation:
35.00 / 3 = 11.6666667
So each item cost about 11.66 or 11.67
EHW Office Supplies, Inc. uses the perpetual inventory system. On September 4, 2019,EHW sold merchandise inventory on account at a price of $50,000 with payment terms of 1/10, n/30. The merchandise cost EHW $40,000. On September 12, 2019, the customer pays the proper amount due for the merchandise based on the credit terms. How much will be credited to Accounts Receivable when recording the collection
Answer:
$50,000
Explanation:
The cash payment was made within the discount period of 10 days,hence the amount received in respect of the sales on account is face value minus discount of 1%.
When sales was made EHW would have debited accounts receivable with $50,000 and credited same to sale revenue.
Cash received=$50,000*(1-1%)=$49,500
discount =$50,000-$49,500=$500
The appropriate entries for cash collection:
Dr cash $49,500
Dr discount allowed $500
Cr accounts receivable $50,000
On January 1, a company issued and sold a $408,000, 9%, 10-year bond payable, and received proceeds of $403,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is:
Answer and Explanation:
The Journal entry is shown below:-
Bond interest expense Dr, $18,610
To Cash $18360
To Discount on bonds $250
(Being first interest payment is recorded)
For recording the first interest payment we simply debited the bond interest expenses as it increased the expenses and we credited cash and discount on bonds as it reduced the assets and the discount should be credited
Working Note
Total discount on bonds issued = Sold bonds - Received proceeds
= $408,000 - $403,000
= $5,000
Amortization of Semi Annual Discount = Total discount on bonds issued ÷ Number of periods
= $5,000 ÷ 20
= $250
Cash interest paid = Sold bonds × Interest rate × From Jan to June ÷ Total number of months in a year
= $408,000 × 9% × 6 ÷ 12
= $18,360
Total Interest expense = Cash interest paid + Amortization of Semi Annual Discount
= $18,360 + $250
= $18,610
Dax Pet Foods compiled the following information for the year for its dog division Average operating assets $3,500,000 Controllable margin $315,000 Dax’s corporate office expects the division to earn a minimum return of 8%. Suppose the dog division invests in a new machine that will produce a new dog food product. The machine is expected to generate $19,500 of controllable profit and will cost $150,000. If Dax buys the new machine, what happens to ROI?
Answer:$2836360
Explanation:
aspela Corp. had the same capital structure in year 7 and year 8, consisting of the following: Preferred stock, $12 par, 5% cumulative, 20,000 shares issued and outstanding $ 240,000 Common stock, $6 par, 250,000 shares issued and outstanding 1,500,000 Caspela reported net income of $600,000 for year 8. No preferred dividends were paid during year 7, but Caspela paid $20,000 in preferred dividends in year 8. In its year 8 income statement what amount should Caspela report as basic earnings per share
Answer:
$2.35 per share
Explanation:
The computation of the earning per share is shown below:
Earning per share = (Net income - preference dividend) ÷ (Number of shares outstanding)
= ($600,000 - $12,000) ÷ (250,000 shares)
= $588,000 ÷ 250,000 shares
= $2.35 per share
The preference dividend is
= $240,000 × 5%
= $12,000
We simply applied the above formula
Mr. Etemadi has prepared the following list of statements about service companies and merchandisers. Identify each statement as true or false.
1. Measuring net income for a merchandiser is conceptually the same as for a service company.
2. For a merchandiser, sales less operating expenses is called gross profit.
3. For a merchandiser, the primary source of revenues is the sale of inventory.
4. Sales salaries and wages is an example of an operating expense.
5. The operating cycle of a merchandiser is the same as that of a service company.
Answer:
Explanation:
1. Measuring net income for a merchandiser is conceptually the same as for a service company. TRUE
2. For a merchandiser, sales less operating expenses is called gross profit.
FALSE
For a merchandiser,sales subtracted from cost of goods sold is called gross profit.
3. For a merchandiser, the primary source of revenues is the sale of inventory.
TRUE
4. Sales salaries and wages is an example of an operating expense. TRUE
5. The operating cycle of a merchandiser is the same as that of a service company.
FALSE
A perpetual inventory system continuously leeps detailed records of the cost of the each purchase and sale. It shows the inventory that should be on hand for energy item.
