Answer:
1. $100,000
2. 2021
Dr Bad debt expense $34,970
Cr Allowance for uncollectible account $34,970
3. $28,300
4. $28,300
Explanation:
1. Calculation for What was the balance in gross accounts receivable as of 12/31/2020
Balance in gross accounts receivable as of 12/31/2020=$10,000/ 10%
Balance in gross accounts receivable as of 12/31/2020 = $100,000
Therefore the balance in gross accounts receivable as of 12/31/2020 will be $100,000
2. Preparation of the journal entry that Johnson should record to recognize bad debt expense for 2021
2021
Dr Bad debt expense $34,970
Cr Allowance for uncollectible account $34,970
(10%*$166,700 + $18,300)
3. Calculation to Determine the amount of accounts receivable written off during 2021
2021 Accounts receivable written off = $10,000 - (-$18,300)
2021 Accounts receivable written off= $28,300
Therefore the amount of accounts receivable written off during 2021 will be $28,300
4. In a situation where Johnson used the direct write-off method, what would bad debt expense be for 2021 will be $28,300 calculated as : [$10,000 - (-$18,300) ]
=$28,300
Therefore the Bad debt expense under direct write off method will be $28,300
On January 2, 2021, Farr Co. issued 10-year convertible bonds at 105. During 2021, these bonds were converted into common stock having an aggregate par value equal to the total face amount of the bonds. At conversion, the market price of Farr's common stock was 50 percent above its par value. On January 2, 2021, cash proceeds from the issuance of the convertible bonds should be reported as:_______.
a. paid-in capital for the entire proceeds.
b. paid-in capital for the portion of the proceeds attributable to the conversion feature and as a liability for the balance.
c. a liability for the face amount of the bonds and paid-in capital for the premium over the face amount.
d. a liability for the entire proceeds.
Answer:
d. a liability for the entire proceeds.
Explanation:
In the case when the bonds would be converted into common stock and the market price of the common stock is 50% over its par value so the cash proceeds that arise from the issuance of the convertible bonds would be reported as the liability as the same would be credited to the liability account
Therefore the right option is d.
Over the past decade, many American candy companies have opened factories in Mexico and Canada to produce candy. The companies, including Hershey Company, Brach's Confections, and Ferrara Pan, then ship candy back to the United States for sale. Although lower wages in Mexico might explain part of this move, wages in Canada are comparable to U.S. wages. Price floors (price supports) for the sugar industry encouraged American candy companies to move production out of the United States. Describe how the enactment of a sugar price floor impacted the market for candy in the United States, resulting in the movement of manufacturing.
Answer:
The sugar industry in the US is very powerful and has been able to establish trade barriers and import quotas that affect domestic prices. Sugar prices in the US are extremely high compared to prices in any other country, including Canada, Mexico, China, European nation, i.e. American sugar is the most expensive in the world.
Besides imposing trade barriers, the government also imposes a binding price floor. Binding price floors always result in deadweight losses since the quantity demanded is lower than equilibrium. This is why American candy manufacturers move their production overseas. the highest cost in the candy industry is actually sugar, and wherever they decide to relocate their factories it will always be cheaper.
Martha is a regional supervisor who earns a base salary of $34,400 per year plus a 1% commission on all service contracts that she sells to existing customers. The company pays salaries on a semi monthly basis and contract commissions on a quarterly basis. As of September 30, Martha had made $38,200 in contract sales for the third quarter. What will be her gross pay on her next pay date
Answer:
Martha gross pay on her next pay date is $1,815.33.
Explanation:
This can be calculated as follows:
Number of semi months in a year = 24
Semi monthly salary = Salary per year / Number of semi months in a year = $34,400 / 24 = $1,433.33
Commission from contract sales for the third quarter = Contract sales for the third quarter * Commission percentage = $38,200 * 1% = $382
Martha gross pay on her next pay date = Semi monthly salary + Commission from contract sales for the third quarter = $1,433.33 + $382 = $1,815.33
Therefore, Martha gross pay on her next pay date is $1,815.33.
Receive cash from customers, $15,000. Pay cash for employee salaries, $9,000. Pay cash for rent, $3,000. Receive cash from sale of equipment, $8,000. Pay cash for utilities, $1,000. Receive cash from a bank loan, $4,000. Pay cash for advertising, $7,000. Purchase supplies on account, $3,000. Required: Post transactions to the Cash T-account and calculate the ending balance.
Answer:
Part 1
Cash Account
$
Debit :
Receive cash from customers 15,000
Sale of Equipment 8,000
Bank Loan 4,000
Totals 27,000
Credit :
Pay cash for employee salaries 9,000
Rent 3,000
Utilities 1,000
Advertising 7,000
Ending Balance 7,000
Totals 27,000
Part 2
Ending Balance is $7,000
Explanation:
Only Cash related purchases and receipts are posted to Cash Account. Thus ignore non-cash related transactions.
The Cash Account : Receipts are posted at the Debit side of this Account and Payments at the Credit Side.
The Balance : After determining the Totals of the Debit and Credit, the shortfall of any of that side represents the Balance.
Andrew owns a gun shop in a high-crime area. The store does not have a camera surveillance system. The high cost of burglary and theft insurance has substantially reduced his profits. A risk management consultant points out that several methods other than insurance can be used to han-dle the burglary and theft exposure. Identify and explain two noninsurance methods that could be used to deal with the burglary and theft exposure.
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.
A company has derivatives transactions with Banks A, B, and C which are worth +$20 million, −$15 million, and −$25 million, respectively to the company. How much margin or collateral does the company have to provide? The transactions are cleared bilaterally and are subject to one-way collateral agreements where the company posts variation margin, but no initial margin. The transactions are cleared centrally through the same CCP and the CCP requires a total initial margin of $10 million.
Answer:
1. With Bilateral Clearing, where the company posts variation margin, but no initial margin:
The company has to provide collateral to Banks A, B, and C of $0 million, $15 million, and $25 million respectively.
Therefore, the total collateral required is $40 million.
2. With Central Clearing through the CCP, where the CCP usually requires an initial margin of $10 million:
The derivatives are netted against each other, and the company’s total variation margin is $20 million (–$20 + $15 + $25) in total.
The total margin required (including the initial margin) is, therefore, $30 million ($20 + $10 million).
Explanation:
a) Data and Calculations:
Worth of derivative with Bank A = +$20 million
Worth of derivative with Bank B = -$15 million
Worth of derivative with Bank C = -$25 million
b) In a bilateral clearing, the company and each bank (called market participants) enter into an agreement with each other to cover all outstanding derivative transactions between the two parties. On the other hand, in central clearing, a central clearing party (CCP) stands between the two sides of an OTC derivative transaction in much the same way that the exchange clearing house does for exchange-traded contracts.
Suppose the statutory incidence were instead on the consumers. Calculate the new equilibrium price and quantity in the market. In that case, the dollar portion of the $0.75/drink tax that is borne by consumers is $ . The dollar portion of the $0.75/drink that that is borne by producers is $ .
Answer:
The new equilibrium price is $6.43 and the quantity is 374.28
The tax borne by consumers is 0.72
The tax borne by producers is 0.03
Explanation:
The old equilibrium price of the bubble tea was $5.71 while the new price of the bubble tea is $6.43. The new price includes the tax effect which is paid by the consumers. The difference in the two equilibrium prices is the tax which is borne by consumers.
If you receive 10 units of utility from consuming one cup of coffee and 16 units of utility from consuming two cups of coffee, which of the following is the likely amount of utility you will receive from consuming three cups of coffee?
Answer:
26
Explanation:
Answer:
18
Explanation:
1 unit= 10 2 units =16 2/16= 8
3 cups is 18
Grouper Company sold 214 color laser copiers on July 10, 2020, for $3,800 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be $303. Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020. Actual warranty costs (inventory) incurred in 2020 were $17,400.
Answer:
1. Dr Cash $813,200
Cr Sales Revenue $813,200
2. Dr Warranty Expense $17,400
Cr Cash $17,400
3. Dr Warranty expense $47,442
Cr Warranty liability $47,442
Explanation:
Preparation of the entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2020.
1. Preparation of the entries to record the sale of the copiers
Dr Cash $813,200
($3,800*214)
Cr Sales Revenue $813,200
(Being to record the sale of the copiers)
2. Preparation of the entries to record the related warranty costs
Dr Warranty Expense $17,400
Cr Cash $17,400
(Being to record the related warranty costs)
3. Preparation of the entries to record any accrual
Dr Warranty expense $47,442
[($303*214)-17,400]
Cr Warranty liability $47,442
(Being to record any accrual)
Mackenzie wants to purchase a new sofa for $900. Her brother tells her that if she can come up with 75% of the purchase price, he will lend her the rest of the amount. If Mackenzie produces the required amount, what will be the amount of the loan she receives from her brother?
Answer:
$225
Explanation:
The cost of the new sofa is $900.
Mackenzie need to raise 75% of the cost price.
Her brother will lend her the balance, which is equivalent to 75% of the cost price.
Mackenzie needs to raise
= 75% of 900
=75/100 x 900
=$675
Her brother will lend her
= $900 - $675
=$225
6. Despite multimillion-dollar investments, many IT organizations cannot respond quickly to evolving business needs. Also, they cannot adapt to large-scale shifts like mergers, sudden drops in sales, or new product introductions. Can cloud computing help organizations improve their responsiveness and get better control of their IT costs
Answer:
Yes
Explanation:
In a way Yes. Cloud Computing can allow an IT organization to quickly meet their current changing needs since they have access to all the necessary equipment and computing power by simply making a phone call. That is the main service of Cloud Computing organizations, they provide all the necessary hardware power to IT companies completely remotely. All the IT company would have to do is pay for the extra computing power that they need and they can get it immediately. This will allow them to immediately adapt to changes such as mergers, sudden drops in sales, or new product introductions.
Project1 costs, Year 1 through Year 4: $100,000; $100,000;$100,000;$100,000 Project1 revenue, Year 1 through Year 4: $0; $5,000;$50,000;$110,000 Calculate ROI for Project1, using a 7 percent discount rate. Discount factor, Year 1 through Year 4: 0.93; 0.87; 0.82; 0.76 Fill in the following blanks - just type the numbers without labels, dollar signs, commas, etc.
Answer and Explanation:
Without discounting :
Return on investment(ROI) for year 1 = -$100000
Return on investment(ROI) for year 2 = -$95000
Return on investment(ROI) for year 3 =-$50000
Return on investment(ROI) for year 4 =$10000
With discounting(PV/(1+r)^n):
Return on investment for year 1 = 0.93×-$100000= -$93000
Return on investment for year 2= 0.87×-$95000= -$82650
Return on investment for year 3 = 0.82×-$50000=-$41000
Return on investment for year 4=
0.76×$10000= $7600
Slapshot Company makes ice hockey sticks. During the month of June, 1,900 sticks were completed at a cost of goods manufactured of $437,000. Suppose that on June 1, Slapshot had 350 units in finished goods inventory costing $80,000 and on June 30, 370 units in finished goods inventory costing $84,000.
1. Prepare a cost of goods sold statement for the month of June.
Slapshot Company
Cost of Goods Sold Statement
For the Month of June
*Cost of goods sold
*Cost of goods Inventory, June 1
*Finished goods inventory June 30
*Work In process, June 1
___*___ $_____
___*___ _____
___*__ _____
__*____ $_____
2. Calculate the number of sticks that were sold during June.
units
Answer:
1. Cost of goods sold statement
Cost of goods sold Inventory, June 1 $80,000
Add: Cost of goods manufactured $437,000
Cost of goods available for sale $517,000
Less: Cost of goods sold Inventory, June 31 $84,000
Cost of goods sold $433,000
2. Number of sticks sold during June
Units on June 1 350
Add: Manufactured in June 1,900
Sticks available for sale 2,250
Less: Ending units June 30 370
Number of sticks sold 1,880
Orientation responsibilities are normally shared between:
of 2
Select one:
a. the HR department and top management.
b. mid- and upper-level executives.
C. coworkers and line managers.
d. the HR department and the new employee's immediate manager.
Clear my choice
Answer:
d. the HR department and the new employee's immediate manager.
Explanation:
An "employee orientation" is part of a new employee's onboarding process, before he's trained. It often happens on the first day of employment. It allows the new employee to feel welcomed in the company, which will make him more successful in achieving his goal.
It is the role of the HR department and direct manager or immediate manager to conduct the orientation. It is the role of the HR to give the employee the company handbook and sign contracts. On the other hand, the immediate manager introduces the new employee to his colleagues and gives him a tour of the company's premise. Some immediate managers provide a welcome party.
Reading the newspaper this morning, you found an article that mentions a woman named Nada who used to live down the street from you. Nada was recently hired by the First State Bank to assist in the evaluation and forecasting of future financial and economic conditions in the communities served by the bank. In which area of finance does Nada work
Answer:
the options are missing:
Financial services
Financial markets and institutions
Managerial finance
Investments
the answer is Financial services.
Explanation:
Financial markets and institutions deals with stock and bond markets, it doesn't include evaluation of local markets.
Managerial finance deals with financial data analysis, and has nothing to do with Nada.
Investments generally deals with large clients, so neighborhood or community analysis doesn't fit very well either
Financial services includes serving smaller clients, e.g. opening checking accounts, mortgages, etc.
The case for product differentiation does not include the fact that A) products that satisfy a real demand survive. B) standards of living rise with product innovation. C) new products satisfy people with different preferences. D) it wastes society's scarce resources.
Answer:
D) it wastes society's scarce resources.
Explanation:
Product differentiation means the products that should be different as compared with the competitor in terms of cost, quality, delivery time, attractiveness, etc
It should involve the satisfaction of the real demand, also the living standard should be rise as per the innovation of the product, and the new product would satisfy the people with their various preferences but it does not involved the wastage of the scarce resources
hence, the option D is correct
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
Concord Corporation had the following transactions during 2022: 1. Issued $190000 of par value common stock for cash. 2. Recorded and paid wages expense of $91200. 3. Acquired land by issuing common stock of par value $76000. 4. Declared and paid a cash dividend of $15200. 5. Sold a long-term investment (cost $4560) for cash of $4560. 6. Recorded cash sales of $608000. 7. Bought inventory for cash of $243200. 8. Acquired an investment in Zynga stock for cash of $31920. 9. Converted bonds payable to common stock in the amount of $760000. 10. Repaid a 6-year note payable in the amount of $334400. What is the net cash provided by financing activities
Answer:
The net cash provided by financing activities -$157,600.
Explanation:
Net cash provided by financing activities refers to the difference between the total cash inflows and total cash outflows from the financing activities section of the cash flow staement.
The net cash provided by financing activities can be calculated by preparing a partial cash flow statement as follows:
Concord Corporation
Net Cash Flow Statement (Partial)
As at December 31, 2022
Details Amount
Par value common stock issued for cash 190,000
Dividend declared and paid in cash (15,200)
6-year note payable repaid (334,400)
Net cash provided by financing activities (157,600)
Therefore, the net cash provided by financing activities -$157,600.
Alternatively, the net cash provided by financing activities can be calculated as follows:
Net cash provided by financing activities = Par value common stock issued for cash - Dividend declared and paid in cash - 6-year note payable repaid = $190,000 - $15,200 - $334,400 = -$157,600
Identify the accoun title.
1. A new company is formed and shareholders invest $12,000 cash.
2. A company purchases for $18,000 cash a new truck that has a list price of $21,000.
3. A company pays stockholders a $10,000 cash dividend.
4. A company purchases a piece of land for $50,000 cash. An appraiser suggests that the value of this land is $55,000.
5. A company declares dividends of $1,100 to the shareholders but does not pay them yet; the company will pay these dividends in 60 days.
6. A company has to pay monthly wages of $5,600 to its employees; the company will pay them in two weeks.
Answer:
1. On formation of new Company and receipt of cash of $ 12,000 from shareholders
Cash Dr $ 12,000
To Share capital Cr $ 12,000
2. On purchase of truck for $ 18,000
Truck A/c Dr $ 18,000
To Cash Cr $ 18,000
(Though list price of truck is $ 21,000, but in accounts only the purchase price will be recorded as its cost borne by the company.)
3. On payment of dividend in cash
Dividend A/c Dr $ 10,000
To Cash Cr $ 10,000
4. On purchase of land
Land A/c Dr $ 50,000
To cash Cr $ 50,000
( On purchase of land on payment of $ 50,000).
There is another method of accounting of land value based on valuation by appraiser. If Company wants to record based on valuation by Appraiser, the accounting will be recorded as under:
Land A/c Dr $ 55,000
To Cash Cr $ 50,000
To gain on purchase of land Cr $ 5,000
5 On declaration of dividend
Dividend A/c Dr $ 1,100
To Dividend Payable A/c Cr $ 1,100
On payment of dividend after 60 days
Dividend payable A/c Dr $ 1,100
To Cash Cr $ 1,100
6. After each month wages will be due to its workers, then accounting entry will be recorded as under
Wages A/c Dr $ 5,600
To Wages payable A/c Cr $ 5,600
After two weeks, on payment of wages, the accounting entry will be recorded as under
Wages payable A/c Dr $ 5,600
To cash Cr $ 5,600
Explanation:
1. The shareholder that will be invested with the help of the cash:
Cash Dr $ 12,000
To Share capital Cr $ 12,000
What is an account title?The specific name given to an item inside of an accounting system is known as the account title.
2. The company purchased a truck this was with the help of the cash
Truck A/c Dr $ 18,000
To Cash Cr $ 18,000
3. Cash payment was made for the stockholders
Dividend A/c Dr $ 10,000
To Cash Cr $ 10,000
4. The company was to make sure that there will be cash and profit for both
Land A/c Dr $ 55,000
To Cash Cr $ 50,000
To gain on purchase of land Cr $ 5,000
5 On declaration of dividend
Dividend A/c Dr $ 1,100
To Dividend Payable A/c Cr $ 1,100
Next entry will be
Dividend payable A/c Dr $ 1,100
To Cash Cr $ 1,100
6. monthly wages of $5,600
Wages A/c Dr $ 5,600
To Wages payable A/c Cr $ 5,600
Next entry will be:
Wages payable A/c Dr $ 5,600
To cash Cr $ 5,600
Learn more about account title, Here:
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Which of the following statements is true based on what we know about the properties of utility? Group of answer choices Alexandra receives 20 utility from drinking one soda and 25 utility from eating a pizza. Therefore, Alexandra enjoys pizza more than sodas. Alexandra receives 20 utility from drinking one soda, and Ally receives 20 utility from consuming one soda. They both receive the same level of satisfaction from consuming a soda. Natalie receives 20 utility from watching a movie while Andrew receives 30 utility from playing a video game. Therefore, Andrew enjoys video games more than Natalie enjoys movies. Ally receives 15 utility from consuming one pizza while Jason receives 25 utility from eating one pizza. Therefore, Jason enjoys pizzas more than Ally.
Answer:
Alexandra receives 20 utility from drinking one soda and 25 utility from eating a pizza. Therefore, Alexandra enjoys pizza more than sodas.
Explanation:
Utility is defined as the level of satisfaction that a consumer derives from consuming various products. It is subjective and is dependent on individual preferences.
So utility or level of satisfaction differs from one individual to the other.
For example 20 utility for Alexandra will be different for 20 utility from Jason as each person has a user defined measurement of utility.
The only option that conveys individual utility is - Alexandra receives 20 utility from drinking one soda and 25 utility from eating a pizza. Therefore, Alexandra enjoys pizza more than sodas.
Alexandra defines her own utility so her level of satisfaction can be compared when she consumes soda and pizza.
The other options compares utility between different individuals and this cannot be done objectively as each person defines his own utility.
A.P. Hill Corporation uses a process-costing system. Products are manufactured in a series of three departments. The following data relate to Department Two for the month of February: Beginning work-in-process (70% complete) 10,000 units Goods started in production 80,000 units Ending work-in-process (60% complete) 5,000 units The beginning work-in-process was valued at $66,000, consisting of $20,000 of transferred-in costs, $30,000 of materials costs, and $16,000 of conversion costs. Materials are added at the beginning of the process; conversion costs are added evenly throughout the process. Costs added to production during February were Transferred-in $16,000 Materials used 88,000 Conversion costs 50,000 Question Assume that the company uses the first-in, first-out (FIFO) method of inventory valuation. Under FIFO, how much conversion cost did A.P. Hill transfer out of Department Two during February
Answer:
$64,360
Explanation:
Calculation for how much conversion cost did A.P. Hill transfer out of Department Two during February
First step is to calculate FIFO EUP for conversion
under the FIFO method
Beginning WIP 3,000
(10,000 units × 30%)
Started and completed 75,000
(80,000units-5,000 units=75,000 units)
(75,000 units × 100% )
Ending WIP 3,000
(5,000 units × 60% )
FIFO EUP for conversion 81,000
(3,000+75,000+3,000)
Now let calculate the conversion cost
Conversion cost =$16,000 + [3,000 Beginning WIP +75,000 Started and completed*($50,000/81,000)]
Conversion cost =[$16,000 + (78,000 × $.62)]
Conversion cost=[$16,000 + $48,360
conversion cost=$64,360
Therefore how much conversion cost did A.P. Hill transfer out of Department Two during February will be $64,360
If a firm is to capture all consumer surplus with twopart pricing when customers are different A. it must set unit price below marginal cost. B. it must set unit price above marginal cost. C. it cannot charge different prices for access fees. D. it must be able to charge different access fees.
Answer: D. it must be able to charge different access fees.
Explanation:
Two part pricing refers to the charging of two prices for access to a service which are a fixed price(lumpsum) and a variable price for every unit used.
If one wants to capture all consumer pricing with this strategy and customers are different, the company simply needs to be able to charge different access fees.
This way they'll be able to charge the different customers different prices based on their willingness to pay such that they will capture all consumer surplus.
Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2020 information related to Blossom Company ($000 omitted).
Administrative expense
Officers' salaries $5,488
Depreciation of office furniture and equipment 4,548
Cost of goods sold 61,158
Rent revenue 17,818
Selling expense Delivery expense 3,278
Sales commissions 8,568
Depreciation of sales equipment 7,068
Sales revenue 97,088
Income tax 9,658
Interest expense 2,448
Required:
a. Prepare income statement for the year 2014 using the mutiple-step form. Common shares outstanding for 2014 total 40,550 (000 omitted).
b. Prepare an income statement for the year 2014 using the single-step form.
Answer:
Part a
Blossom Company
Income statement for the year 2014 - multiple-step form
$000
Sales revenue 97,088
Less Cost of goods sold (61,158)
Gross Profit 35,930
Less Operating Expenses :
Administrative expense
Officers' salaries 5,488
Depreciation of office furniture and equipment 4,548 (10,036)
Selling expense :
Delivery expense 3,278
Sales commissions 8,568
Depreciation of sales equipment 7,068 (18,914)
Operating Income (Loss) 6,980
Less Non Operating Expenses :
Income tax 9,658
Interest expense 2,448 (12,106)
Net Income (Loss) (5,126)
Part b
Blossom Company
Income statement for the year 2014 - single-step form
$000
Sales revenue 97,088
Less Cost of goods sold (61,158)
Gross Profit 35,930
Less Expenses :
Officers' salaries 5,488
Depreciation of office furniture and equipment 4,548
Delivery expense 3,278
Sales commissions 8,568
Depreciation of sales equipment 7,068
Income tax 9,658
Interest expense 2,448 (41,056)
Net Income (Loss) (5,126)
Explanation:
The multiple-step form shows the Operating Income and Net Income separately by grouping expenses as either operating and non-operating expenses.
The single-step form shows all expenses under one category and no grouping of expenses as either operating or non-operating.
Issued 30,000 shares of common stock in exchange for $300,000 in cash. Purchased equipment at a cost of $40,000. $10,000 cash was paid and a notes payable to the seller was signed for the balance owed. Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system. Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000. Paid $5,000 in rent on the warehouse building for the month of March. Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2021. Paid $70,000 on account for the merchandise purchased in 3. Collected $55,000 from customers on account. Recorded depreciation expense of $1,000 for the month on the equipment. Post the above transactions to the below T-accounts.
Answer:
T-accounts:
Cash
Accounts Titles Debit Credit
Common Stock $300,000
Equipment $10,000
Rent Expense 5,000
Prepaid Insurance 6,000
Accounts Payable 70,000
Accounts Receivable 55,000
Equipment
Accounts Titles Debit Credit
Cash $10,000
Notes Payable 30,000
Notes Payable
Accounts Titles Debit Credit
Equipment $30,000
Inventory
Accounts Titles Debit Credit
Accounts Payable $90,000
Cost of Goods Sold $70,000
Accounts Payable
Accounts Titles Debit Credit
Inventory $90,000
Cash $70,000
Accounts Receivable
Accounts Titles Debit Credit
Sales Revenue $120,000
Sales Revenue
Accounts Titles Debit Credit
Accounts Receivable $120,000
Cost of Goods Sold
Accounts Titles Debit Credit
Inventory $70,000
Rent Expense
Accounts Titles Debit Credit
Cash $5,000
Prepaid Insurance
Accounts Titles Debit Credit
Cash $6,000
Common Stock
Accounts Titles Debit Credit
Cash $300,000
Depreciation Expense
Accounts Titles Debit Credit
Acc Depreciation $1,000
Accumulated Depreciation - Equipment
Accounts Titles Debit Credit
Depreciation Expense $1,000
Explanation:
T-account consists of the following. An account title to record the corresponding account where the double-entry transaction is completed. A debit side on the left to enter the dollar value of the transaction, if the concerned account receives the value. A credit side on the right, also, to enter the dollar value of the transaction, if the concerned account gives out the value.
Headland Inc. issued $4,130,000 of 11%, 10-year convertible bonds on June 1, 2020, at 98 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1,548,750 of these bonds were converted into 24,000 shares of $21 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest expense at October 1, 2020. Assume that accrued interest payable was credited when the bonds were issued. (b) Prepare the entry to record the conversion on April 1, 2021. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made.
Answer:
A. Dr Interest Payable $75,717
Dr Interest expense $154,233
Cr Discount on Bonds payable $2,800
Cr Cash $227,150
B. Dr Bonds payable $1,548,750
Cr Discount on Bonds payable $28,350
Cr Common Stock$504,000
Cr Paid-in capital in excess of par- Common Stock $1,073,100
Explanation:
(a) Preparation of the entry to record the interest expense at October 1, 2020. Assume that accrued interest payable was credited when the bonds were issued.
Dr Interest Payable $75,717
[($4,130,000*0.11)/2*(2/6)]
Dr Interest expense $154,233
[($4,130,000*.11)/2*(4/6) + $2,800]
Cr Discount on Bonds payable $2,800
($700*4)
Cr Cash $227,150
[ ( $4,130,000*.11)/2]
Calculation for the discount per month
First step is to calculate the remaining months
Months remaining= (10 years *12-2)
Months remaining=118 months
Second step is to calculate the Total discount
Total Discount=$4,130,000-($4,130,000*.98)
total discount=$4,130,000-$4,047,400
total discount=$82,600
Now let calculate the discount per month
Discount per month=($82,600/118)
Discount per month=$700
(b) Preparation of the entry to record the conversion on April 1, 2021
Dr Bonds payable $1,548,750
Cr Discount on Bonds payable $28,350
Cr Common Stock$504,000
(24,000*$21)
Cr Paid-in capital in excess of par- Common Stock $1,073,100
[$1,548,750+$28,350-($504,000)]
Calculation for Unamortized bond discount
Discount of the bonds $30,975
($82,600*(3/8))
Less Discount amortized ($2,625)
[($82,600/118)*10 years*(3/8)]
Unamortized bond discount $28,350
($30,975-$2,625)
Counselors of Mableton purchased equipment on January 1, 2017, for $37,000. Counselors of Mableton expected the equipment to last for five years and have a residual value of $4,500. Suppose counselors of Mableton sold the equipment for $25,200 on December 31, 2018, after using the equipment for two full years. Assume depreciation 2018 has been recorded. Journalize the sale of equipment, assuming straight-line depreciation was used
Answer:
Dr cash $25,200
Dr accumulated depreciation $13,000
Cr equipment $37,000
Cr profit on disposal $1,2000
Explanation:
The yearly depreciation expense on the equipment is computed thus:
depreciation=(cost-residual value)/useful life
cost=$37000
residual value=$4,500
useful life= 5 years
depreciation=($37000-$4500)/5
depreciation=$6,500
accumulated depreciation for 2 years=$6,500*2=$13,000
Cash proceeds from disposal=$25,200
Upon disposal, we would debit cash with $25,200 as well as accumulated depreciation with $13,000 while the equipment account is credited with the original cost of $37,000
Total debits=$25,200+$13,000=$38,200
total credit=$37,000
profit on disposal=$38,200-$37000=$1,200
A friend asks to borrow $55 from you and in return will pay you $58 in one year. If your bank is offering a 6% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $55 instead
Answer:
$58.3
Explanation:
Interest = principal x interest x time
$55 x 0.06 x 1 = $3.3.
Amount = principal + interest
= $55 + $3.3. = $58.3
When sales increase by 3%, which of the following should also increase by 3% in a merchandising company?
A. Variable cost.
B. Fixed cost.
C. Gross margin.
D. Contribution margin.
E. Net operating income.
When sales increase by 13%, which of the following should increase by more than 13% in a merchandizing company?
A. Variable cost.
B. Fixed cost.
C. Gross margin.
D. Contribution margin.
E. Net operating income.
Answer:
Part 1
C. Gross margin
E. Net operating income
Part 2
C. Gross margin
E. Net operating income
Explanation:
A merchandizing company bought goods for resale rather than manufacturing and selling as seen with manufacturing companies.
The items which vary with sales in a merchandizing company are Gross Margin and Net Operating income. Such are the items that will increase with an increase in Sales.
For journal entries 1 through 12, select the letter of the explanation that most closely describes it in the space beside each entry. You can use letters more than once. To record receipt of unearned revenue. To record this period's earning of prior unearned revenue. To record payment of an accrued expense. To record receipt of an accrued revenue. To record an accrued expense. To record an accrued revenue. To record this period's use of a prepaid expense. To record payment of a prepaid expense. To record this period's depreciation expense.
Question Completion:
For each of the following entries, select the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.)
A. To record receipt of unearned revenue
B. To record this period's earning of prior unearned revenue
C. To record payment of an accrued expense
D. To record receipt of an accrued revenue
E. To record an accrued expense
F. To record an accrued revenue
G. To record this period's use of a prepaid expense
H. To record payment of a prepaid expense
I To record this period's depreciation expense
Journal Entries
Insurance Expense 1,900
Prepaid Insurance 1,900
Salaries Payable 3,900
Cash 3,900
Prepaid Rent 3,200
Cash 3,200
Salaries Expense 4,900
Salaries Payable 4,900
Interest Receivable 1,900
Interest Revenue 1,900
Cash 3,900
Accounts Receivable (from consulting) 3,900
Cash 5,900
Unearned Professional Fees 5,900
Cash 4,300
Interest Receivable 4,300
Rent Expense 8,000
Prepaid Rent 8,000
Interest Expense 6,300
Interest Payable 6,300
Depreciation Expense 1,300
Accumulated Depreciation 1,300
Unearned Professional Fees 1,900
Professional Fees Earned 1,900
Answer:
Journal Entries with appropriate descriptions:
Insurance Expense 1,900
Prepaid Insurance 1,900
G. To record this period's use of a prepaid expense
Salaries Payable 3,900
Cash 3,900
C. To record payment of an accrued expense
Prepaid Rent 3,200
Cash 3,200
H. To record payment of a prepaid expense
Salaries Expense 4,900
Salaries Payable 4,900
E. To record an accrued expense
Interest Receivable 1,900
Interest Revenue 1,900
F. To record an accrued revenue
Cash 3,900
Accounts Receivable (from consulting) 3,900
D. To record receipt of an accrued revenue
Cash 5,900
Unearned Professional Fees 5,900
A. To record receipt of unearned revenue
Cash 4,300
Interest Receivable 4,300
D. To record receipt of an accrued revenue
Rent Expense 8,000
Prepaid Rent 8,000
G. To record this period's use of a prepaid expense
Interest Expense 6,300
Interest Payable 6,300
E. To record an accrued expense
Depreciation Expense 1,300
Accumulated Depreciation 1,300
I To record this period's depreciation expense
Unearned Professional Fees 1,900
Professional Fees Earned 1,900
B. To record this period's earning of prior unearned revenue
Explanation:
Journal entries are usually recorded to adjust revenue and expenses to the accrual basis of accounting and to match expenses to the period's revenue and vice versa. Short narrations are provided after recording each transaction. The purpose is to provide some descriptions of the transaction so that it can be understood by another person reviewing the records.
