Answer:
$32,375
Explanation:
The computation of operating cash flow for this project is shown below:-
Annual depreciation = Cost of fixed assets ÷ Life in years
= $68,000 ÷ 4 years
= $17,000
Operating cash flow
Annual sales $78,500
less: Cash cost ($41,000)
less: Depreciation ($17,000)
Earnings before tax $20,500
less: Tax at 25% ($5,125)
Earnings after tax $15,375
Add: Depreciation $17,000
Operating cash flow
every year $32,375
Therefore the operating cash flow is $32,375
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)
1.) What are the three personal traits that help you most in the business world?
Answer:
Curiosity. Technology develops at different rates and in different ways around the world.
A Sense of Impatience. Entrepreneurs need impatience in order to recognize inefficiencies
Sociability. It’s important for any entrepreneur to have a good network of like-minded people to
Explanation:
Picayune company purchased 40,000 of Stewart Company's 100,000 shares for $400,000 on 1/1/X1 when Stewart's equity consisted of $500,000 capital stock and $500,000 of retained earnings. An appraisal of Stewart's assets failed to identify any mis-valued assets. Picayune designated the Investment as a fair value investment. During year X1, Stewart earned a $100,000 net income and paid $50,000 of dividends. On 12/31/X1, Stewart's stock traded at $10.20 per share. How much investment income should Picayune recognize in year X1?
Answer:
a. $8,000
b. $20,000
c. $28,000
d. $40,000
The correct answer is B,$20,000
Explanation:
The investment income attributable to entire shareholders of Picayune is the amount of dividends paid,which is $50,000.
Out of which Picayune is entitled to 40% (40,000/100,000) based on the shareholding of Picayune in Stewart Company.
Dividends received by Picayune =40%*$50,000=$20,000
The investment income of Picayune to be recognized in year X1 is $20,000
Purdum Farms borrowed $16 million by signing a five-year note on December 31, 2017. Repayments of the principal are payable annually in installments of $3.2 million each. Purdum Farms makes the first payment on December 31, 2018 and then prepares its balance sheet. What amount will be reported as current and long-term liabilities, respectively, in connection with the note at December 31, 2018, after the first payment is made?
Answer:
Current liabilities $3.2 million
long-term liabilities =$16 million-$3.2 million-$3.2 million=$9.6 million
Explanation:
The amount classified as current liabilities as at 31st December 2018 is the portion of the loan repayable within a year,that the repayment due at 31st December 2019 which is $3.2 million.
The amount to be classified as long term liabilities is the balance of the loan after having taken out the payment in year 1 as well as the repayment to be made in year 2
Kevin, Rajiv, and Yakov are hunters who live next to a recreational wildlife game area that is open to hunting; in other words, anyone is free to use the recreational wildlife game area for hunting. Assume that these men are the only three hunters who hunt in this recreational wildlife game area and that the recreational wildlife game area is large enough for all three hunters to hunt intensively at the same time.
Each year, the hunters choose independently how often to hunt; specifically, they choose whether to hunt intensively (that is, to set several traps and hunt long hours, which hurts the sustainability of the recreational wildlife game area if enough people do it) or to hunt nonintensively (which does not hurt the sustainability of the recreational wildlife game area). None of them has the ability to control how much the others hunt, and each hunter cares only about his own profitability and not the state of the recreational wildlife game area.
Assume that as long as no more than one hunter hunts intensively, there are enough animals to restock the recreational wildlife game area. However, if two or more hunt intensively, the recreational wildlife game area will become useless in the future. Of course, hunting intensively earns a hunter more money and greater profit because he can sell more animals.
The recreational wildlife game area is an example of _____________ because the animals in the recreational wildlife game area are ________ and ___________.
Answer: Common resource ,
Non excludable and Rival in consumption
Explanation:
Common resource is defined as the resource that is usually available to people in open form and people tend to overuse it.This creates shortage of resource and brings scarcity.They are considered rival in nature.Any good is considered rival if consumption of good by one person reduces consumption of that good for another person. It is regarded as subtractable.Non-excludable good is defined as the good that does not stop other people or group of people to consume or use it.There is no certain restriction of using particular good.According to the questions scenario, recreational wildlife game area is common resource because Yakov, Rajiv and Kevin are using that area for hunting openly .Other hunters can also use the area for hunting as it is available commonly for everyone as per their needs.
Animal of wildlife game area can be considered rival and non-excludable in consumption because they are openly available for hunter and there is no restriction on their usage (hunting) particularly.Thus, if a hunter hunts more number of animals using intensive hunting mechanism, it will reduce number of animals for other hunters .
Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a credit balance of $3,700. During the year, Abbott wrote-off accounts receivable totaling $2,700 and made credit sales of $118,000. After the adjusting entry, the December 31 balance in Bad Debt Expense would be
a. $4,540
b. $3,540
c. $3,700
d. $7,240
Answer:
$2,540
Options are inconsistent with given question
Explanation:
Allowance for uncollectible accounts is a contra asset account and it has credit nature. It needs to be debited to decrease the balance and credited to increase the balance. Balance of this account is adjusted in the account receivable to report the net receivable balance in the balance sheet.
As per given data
Beginning allowance for uncollectible accounts balance = $3,700
Write off is the adjustment mad in this account and it needs to be debited in this account, this transaction will reduce the balance.
Adjusted Balance = $3,700 - 2,700 = $1,000
Credit sales = $118,000
Estimated allowance for uncollectible accounts balance = $118,000 x 3% = $3,540
As allowance for uncollectible accounts has already have balance of $1,000, Bad debt expense for the year is $2,540 ($3,540 - $1,000).
Flychucker Corporation is evaluating an extra dividend versus a share repurchase. In either case $19,000 would be spent. Current earnings are $1.40 per share, and the stock currently sells for $50 per share. There are 5,000 shares outstanding. Ignore taxes and other imperfections. a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share
Answer:
Alternative I: (Extra dividend)
Price per share is $ 46.20
Shareholder wealth per share is $ 42.40
Alternative II: ( Share repurchase)
For share repurchase, the price per share and the shareholder wealth is equal to the stock price.
Explanation:
Alternative I: (Extra dividend)
Amount spent = $19,000
Outstanding shares = 5,000 shares
Stock price = $50
Price per share = Stock price - [tex]\frac{Amount spent}{Outstanding Shares}[/tex]
= $50 - [tex]\frac{19,000}{5,000}[/tex] = $50 - $3.8
= $ 46.20
Shareholder wealth per share = Price per share - [tex]\frac{Amount spent}{Outstanding Shares}[/tex]
= $46.20 - $3.8
=$ 42.40
Alternative II: ( Share repurchase)
For share repurchase, the price per share and the shareholder wealth is equal to the stock price.
PC.54 Claire & Dee's Tire Factory in Rexburg provides a free tire-rotation service for customers who purchase tires from them. For years this process took an average employee about 20 minutes to perform. Since they make no additional revenue from this service, they would like to make this process as efficient (or productive) as possible. Recognizing this challenge, management and key employees analyzed the process and made some time-saving changes. Over the course of a month they trained all employees on the new process, and after doing so, an average employee could rotate a set of four tires in about 15 minutes.In this case, what is the output that should be used for productivity calculations?
Answer:
15 minutes which result in 4 sets of tires per hour
Explanation:
Labor productivity is determined as the total output produced by an average worker during one hour. In this case, to determine the productivity of Claire & Dee's employees, you would need to determine how many sets of tires can an employee change in one hour = 60 minutes / 15 minutes = 4.
The output that should be used for productivity calculations is the new productivity improvement rate of 8%.
Data and Calculations:
Old efficiency rate = 33% (20/60 x 100)
New efficiency rate = 25% (15/60 x 100)
Productivity Improvement Rate
The new productivity improvement rate is 8% (5/60 x 100) or (33% - 25%), showing that workers can provide 4 free tire rotation services for customers in an hour, unlike the 3 free tire rotation services they provided under the old regime.
Thus, the output that should be used for productivity calculations is the new productivity improvement rate of 8%.
Learn more about productivity calculations at https://brainly.com/question/2992817
During 2017, Woods Company purchased 80,000 shares of Holmes Corporation common stock for $1,260,000 as an equity investment. The fair value of these shares was $1,200,000 at December 31, 2017. Woods sold all of the Holmes stock for $17 per share on December 3, 2018, incurring $56,000 in brokerage commissions.
Required:
1. Woods Company should report a realized gain on the sale of stock in 2018 of ____________.
Answer:
The multiple choices are as follows:
a.$44,000.
b.$100,000.
c.$104,000.
d.$160,000.
Option A,$44,000 is correct
Explanation:
In the year 2017,an unrealized loss of $60,000 was recorded on the investment i.e fair value at year end of $1,200,000 minus the cost of the investment of $1,260,000
In the year 2018,the total cash proceeds from sale of investment=($17*80,000)-$56,000=$1,304,000
The realized gain on sale of stock in 2018=cash proceeds-fair value-unrealized loss of $60,000=$1,304,000-$1,200,000-$60,000 =$44,000
Pochard Paints manufactures artist’s oil paints. Each 40 ml tube of paint requires 5 minutes of direct labor, and the standard labor rate is $9 per direct labor hour. In September, Pochard incurred 10,800 direct labor hours at a cost of $95,000 to produce 120,000 tubes of paint. Calculate Pochard’s direct labor rate variance for September. (Round answer to 0 decimal places, e.g. 125. If variance is zero, select "Not Applicable" and enter 0 for the amounts.)
Answer:
Direct labor rate variance= $2,160 favorable
Explanation:
Giving the following information:
The standard labor rate is $9 per direct labor hour.
In September, Pochard incurred 10,800 direct labor hours for $95,000.
To calculate the direct labor rate variance, we need to use the following formula:
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Actual rate= 95,000/10,800= $8.80
Direct labor rate variance= (9 - 8.8)*10,800
Direct labor rate variance= $2,160 favorable
It is favorable because the hourly rate was cheaper than estimated.
A peer-review board for alternative dispute resolution usually consists of: A. an equal number of employee representatives and management appointees B. managers above the level of the supervisor whose decision is being appealed. C. employees at the same level as the appealing employee. D. managers, subordinates, and a number of unbiased third-party participants who do not work for the employer.
Answer:
The answer is option A) A peer-review board for alternative dispute resolution usually consists of: an equal number of employee representatives and management appointees
Explanation:
Alternative dispute resolution is an affordable, less time consuming and less formal way of settling workplace disputes. To achieve this feat, a peer review board is constituted.
A peer review board usually consists of employers and management appointees and it could be a voluntary decision on their art to participate.
The pool of individuals nominated to be part of the peer review board is considered objective and unbiased in their assessment of the issue to be resolved. They are also deemed skillful in the art of listening and arbitration.
The conversion rate is restated for all stock dividends and splits. Coffee had the following stock transactions in 2005 and 2006:
1/1/2005 - Sold 30,000 shares of common stock at $20 per share.
1/1/2005 - Sold 10,000 shares of preferred stock at $100 per share.
4/1/2005 - Issued at 50 percent stock dividend when the market price is $26 per share.
9/1/2005 - Purchased 4,000 treasury shares at $30 per share.
10/1/2005 - Sold 1,000 of the treasury shares at $32 per share.
11/1/2005 - Sold 2,000 of the treasury shares at $25 per share.
12/1/2005 - Issued a 2-1 for stock split.
12/20/2005 - Declared the required dividend to preferred stock holders and a $.25 per share dividend to common stockholders. Dividends are payable on 12/31/2005.
Prepare journal entries to record all of the above business events
Answer and Explanation:
The journal entries are shown below:
On Jan 1
Cash (30,000 Shares × $20) $600,000
To Common Stock (30,000 Shares × $2) $60,000
To Paid In Capital in Excess of Par - Common Stock $540,000
(Being the sale of the common stock is recorded)
On Jan 1
Cash (10,000 Shares × $100) $600,000
To Preferred Stock (10,000 Shares × $100) $1,000,000
(Being the sale of the preferred stock is recorded)
On Jan 4
Retained Earnings (30,000 × 50% × $26) $390,000
To Common Stock (15,000 shares × $2) $30,000
To Paid In Capital in Excess of Par - Common Stock $360,000
(Being the issued of the stock dividend is recorded)
On Jan 9
Treasury Stock (4,000 Shares × $30) $120,000
To Cash $120,000
(Being the purchase of treasury stock is recorded)
On Jan 10
Cash (1,000 Shares × $32) $32,000
To Treasury Stock (1,000 Shares × $30) $30,000
To Paid in Capital from Treasury Stock $2,000
(Being the sale of the treasury stock is recorded)
On Jan 11
Cash (2,000 Shares × $25) $50,000
Paid in Capital - Treasury Stock $2,000
Retained Earnings $8,000
To Treasury Stock (2,000 Shares × $30) $60,000
(Being the sale of the treasury stock is recorded)
On Jan 12
Since the shares are issued for 2 to 1 i.e the number of shares is rises from 29,000 shares to 58,000 shares due to which the par value is decreased from $2 to $1 per share. So the new 29,000 shares were to be distributed
On Dec 20
Retained Earnings $74,500
To Dividend Payable - Preferred Stock (10,000 Shares × 100 × 6%) $60,000
To Dividend Payable - Common Stock (58,000 Shares × $0.25) $14,500
(Being the dividend is declared)
Which of the following is true of a stock dividend? Multiple Choice It is a liability on the balance sheet. The decision to declare a stock dividend resides with the shareholders. Transfers a portion of equity from retained earnings to a cash reserve account. Does not affect total equity, but transfer amounts between the components of equity. Reduces a corporation's assets and stockholders' equity.
Answer:
Yes it is true that a stock dividend does not affect total equity.
Explanation:
A stock dividend is a non cash payment given to shareholders. Instead of cash, additional shares that is equivalent to the earnings that accrue is given to shareholders.
While this may increase the number of shares held, it does not affect total equity.
One of the benefits of stock dividends tax exemption and retained equity which translates to additional investment.
However, the additional; shares created could dilute the share prices.
The following costs result from the production and sale of 5,000 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $350 each. The company has a 25% income tax rate.
Variable production costs
Plastic for casing $ 185,000
Wages of assembly workers 510,000
Drum stands 230,000
Variable selling costs
Sales commissions 175,000
Fixed manufacturing costs
Taxes on factory 5,000
Factory maintenance 10,000
Factory machinery depreciation 70,000
Fixed selling and administrative costs
Lease of equipment for sales staff 10,000
Accounting staff salaries 60,000
Administrative management salaries 140,000
Prepare contribution margin income statement for the company.
Answer and Explanation:
The preparation of the contribution margin income statement for the company is presented below:
Tight Drums Company
Contribution margin income statement
For the year ended December 31, 2017
Sales (5,000 drums × $350) $1,750,000
Less: Variable cost
Plastic for casing -$185,000
Wages of assembly workers $510,000
Drum stands $230,000
Variable selling costs
Sales commissions $175,000
Total variable cost -$1,100,000
Contribution margin $650,000
Less: Fixed cost
Fixed manufacturing costs
Taxes on factory $5,000
Factory maintenance $10,000
Factory machinery depreciation $70,000
Fixed selling and administrative costs
Lease of equipment for sales staff $10,000
Accounting staff salaries $60,000
Administrative management salaries $140,000
Total fixed cost -$295,000
Net operating income $355,000
Less: income tax expense at 25% -$88,750
Net income $266,250
We simply deduct the variable cost and fixed cost from the sales revenue so that the net operating income could come and then deducted the income tax expense so that net income could arrive
Tom, Dan and Phil work indifferent teams at Springfield Automotive. Tom's team ensures that all the raw materials, machinery, tools and other production equipment are available for the employees around the clock. Any procurement needs have to be addressed to Tom, who also takes part in high-level decisions regarding the number of units to produced, exported and so on. Dan works as part of a team of eight members who concentrate the day-to-day productions; they also ensure that the quality checks are done and inspect each other's work. Phil is the operations manager, who works for 5 hours in the production department and then spends the rest of his time assisting management as an internal consultant on manufacturing issues. His input is crucial in improving the production process. Dan's contribution is toward the __________.
Answer: Work team
Explanation: Dan's contribution is towards the work team whereas Phil works in the parallel team while Tom is part of the management team. a work team which Dan is a member of is defined as a group of workers or employees with different set of skills that work together on a given task such as the day-to-day productions in a business, quality control and inspection, etc. Work teams are most efficient or useful where there is a frequent change in job content and employees with limited skills and a specific set of duties are unable to cope (work teams thus provide expert advice that will increase the ability of employees to participate in planning, problem-solving, and decision-making that are needed to complete a set of work and to better serve customers).
A magazine article reported that college students spend an average of $100 on a first date. A university sociologist believed that number was too high for the students at the university. The sociologist surveyed 32 randomly selected students from the university and obtained a sample mean of $92.23 for the most recent first dates. A one-sample T-test resulted in a p-value of 0.026.
Which of the following is a correct interpretation of the p-value?
A. The probability is 0.026 that the mean amount of money students from the university spend on a first date is less than $100
B. The probability is 0.026 that the mean amount of money students from the university spend on a first date is less than $92.23
C. The probability is 0.026 that the mean amount of money students from the university spend on a first date is more than $92.23
D. If the mean amount of money that students from the university spend on a first date is $100, the probability is 0.026 that a randomly selected group of 32 students from the university would spend a mean of $92.23 or less on their most recent first dates
E. If the mean amount of money that students from the university spend on a first date is less than $100, the probability is 0.026 that a randomly selected group of 32 students from the university would spend a mean of $92.23 or less on their most recent first dates.
Answer:
D. If the mean amount of money that students from the university spend on a first date is $100, the probability is 0.026 that a randomly selected group of 32 students from the university would spend a mean of $92.23 or less on their most recent first dates
Explanation:
Given that:
mean amount of money spent by the students is= $100
Surveyed of random selection of 32 students is obtained from the university
sample result a mean value of $92.23
The p-value = 0.026
The p-value is the probability value that helps to determinethe observed or more extreme results when the null hypothesis H₀ of a study question is true.
From the question; the correct interpretation of the p-value is :
If the mean amount of money that students from the university spend on a first date is $100, the probability is 0.026 that a randomly selected group of 32 students from the university would spend a mean of $92.23 or less on their most recent first dates
Answer:
The correct answer is (D)
Explanation:
Solution
For the value p, the correct interpretation is: Under null hypothesis the probability of obtaining the sample observations
From the question given,the right answer is:If the mean amount of money that students from the university spend on a first date is $100, the probability is 0.026 that a randomly selected group of 32 students from the university would spend a mean of $92.23 or less on their most recent first dates
Piels Corporation produces a part that is used in the manufacture of one of its products. The costs associated with the production of 10,000 units of this part are as follows:
Direct materials $ 90,000
Direct labor 130,000
Variable factory overhead 60,000
Fixed factory overhead 140,000
Total costs $420,000
Of the fixed factory overhead costs, $60,000 is avoidable. Conners Company has offered to sell 10,000 units of the same part to Piels Corporation for $36 per unit.
Required:
1. Assuming there is no other use for the facilities, Piels should ___________.
Answer:
It is cheaper to produce
Explanation:
Cost of producing
Direct materials - 90000
Direct labor - 130000
Variable factory overhead - 60000
Fixed factory overhead - 60000
Total cost - 340000
Cost of buying `10000*36 = 360000
Incremental cost of buying = 360000-340000 = $20,000
It is cheaper to produce at 340000/10000 = $34 /unit
In making a decision whether to buy or manufacture , variable cost and the avoidable costs are considered relevant for this purpose
You would like to retire in 30 years. The expected rate of inflation is 2% per year. You currently have a standard of living that requires $7940 of monthly expenses. Assuming you want to maintain the same standard of living in retirement, what are your monthly expenses expected to be the first year of retirement
Answer:
You would need $14,382.21 to maintain your purchasing power.
Explanation:
Giving the following information:
You would like to retire in 30 years. The expected rate of inflation is 2% per year. You currently have a standard of living that requires $7940 of monthly expenses.
The inflation rate has the same intrinsic behavior as an investment with a compounded interest rate.
We need to use the following formula:
FV= PV*(1+i)^n
FV= 7,940*(1.02^30)
FV= $14,382.21
You would need $14,382.21 to maintain your purchasing power.
Darrin’s Auto Northern Division is currently purchasing a part from an outside supplier. The company's Southern Division, which has no excess capacity, makes and sells this part for external customers at a variable cost of $15 and a selling price of $27. If Southern begins sales to Northern, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $3. On the basis of this information, Southern would establish a transfer price of:
Answer:
Transfer price = $24
Explanation:
As per the data given in the question,
The excess capacity of Company's Southern division is nill therefore for transferring the units the division will have to decrease its external sales.The Loss occurred due to reduction in external sales should be from inter divisional transfer price. Therefore,
Transfer price = variable cost + Loss of contribution
= ($15 - $3) + ($27 - $15)
= $24
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.
Exercise 8-14 Inventory cost flow methods; perpetual system [LO8-1, 8-4] Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2018: Aug.1 Inventory on hand—2,100 units; cost $6.20 each. 8 Purchased 10,500 units for $5.60 each. 14 Sold 8,400 units for $12.10 each. 18 Purchased 6,300 units for $5.40 each. 25 Sold 7,400 units for $11.10 each. 31 Inventory on hand—3,100 units. Exercise 8-14 Part 1 Required: 1. Determine the inventory balance Altira would report in its August 31, 2018, balance sheet and the cost of goods sold it would report in its August 2018 income statement using the FIFO method. (Round "Cost per Unit" to 2 decimal places.)
Answer:
a. The inventory balance Altira would report in its August 31, 2018, balance sheet is $16,740.
b. Cost of good sold = $89,100
Explanation:
a. Determine the inventory balance Altira would report in its August 31, 2018, balance sheet
Based on FIFO method, we have:
Inventory 8,400 sold on Aug. 14 = 2,100 units from Aug. 1 beginning balance+ 6,300 units from Aug. 8 Purchases
Aug. 8 purchases balance after the Agug 14. sales = 10,500 - 6,300 = 4,200 units
Inventory 7,400 sold on Aug. 25 = 4,200 from Aug. 8 balance+ 3,200 from Aug. 18 Purchases
Aug. 18 purchases balance after the Agug 25. sales = 6,300 - 3,200 = 3,100 units
Value of closing inventory = 3,100 * 5.40 = $16,740
Therefore, the inventory balance Altira would report in its August 31, 2018, balance sheet is $16,740.
b. Determine the cost of goods sold it would report in its August 2018 income statement using the FIFO method.
Beginning inventory value = 2,100 * 6.20 = $13,020
Value of purchases = (10,500 * $5.60) + (6,300 * $5.40) = $92,820
Value of closing inventory = $16,740
Cost of good sold = $13,020 + $92,820 - $16,740 = $89,100
The pretax financial income (or loss) figures for Whispering Company are as follows. 2015 $164,000 2016 275,000 2017 86,000 2018 (164,000 ) 2019 (390,000 ) 2020 113,000 2021 98,000 Pretax financial income (or loss) and taxable income (loss) were the same for all years involved. Assume a 25% tax rate for 2015 and 2016 and a 20% tax rate for the remaining years. Prepare the journal entries for the years 2017 to 2021 to record income tax expense and the effects of the net operating loss carryforwards. All income and losses relate to normal operations. (In recording the benefits of a loss carryforward, assume that no valuation account is deemed necessary.)
Answer and Explanation:
The journal entries are shown below:
On 2017
Income Tax Expense $17,200 ($86,000 × 20%)
To Income Tax Payable $17,200
(Being the income tax expense is recorded)
On 2018
Income Tax Refund Receivable $32,800 ($164,000 × 20%)
To Income tax refund due to loss carry back $32,800
(Being the refund receivable is recorded)
On 2019
Income Tax Return Receivable $17,200 ($86,000 × 20%)
To Income tax refund $17,200
(Being the refund receivable is recorded)
Deferred Tax Asset $60,800 [(390,000 - $86,000) × 20%]
To income tax refund $60,800
(Being the refund receivable is recorded)
On 2020
Income Tax Expense $22,600 ($113,000 × 20%)
To Deferred Tax Asset $22,600
(Being the income tax expense is recorded)
On 2021
Income Tax Expense $19,600 ($98,000 × 20%)
To Deferred Tax Asset $19,600
(Being the income tax expense is recorded)
Problem 4-6 (Algo) Income statement presentation; Discontinued operations; EPS [LO4-1, 4-3, 4-4, 4-5] Rembrandt Paint Company had the following income statement items for the year ended December 31, 2021 ($ in thousands): Sales revenue $ 24,000 Cost of goods sold $ 13,500 Interest revenue 220 Selling and administrative expense 3,100 Interest expense 420 Restructuring costs 1,400 In addition, during the year the company completed the disposal of its plastics business and incurred a loss from operations of $2.2 million and a gain on disposal of the component’s assets of $3.2 million. 600,000 shares of common stock were outstanding throughout 2021. Income tax expense has not yet been recorded. The income tax rate is 25% on all items of income (loss). Required: Prepare a multiple-step income statement for 2021, including EPS disclosures. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands except earnings per share. Round EPS answers to 2 decimal places.)
Answer and Explanation:
The preparation of the multiple-step income statement is presented below:
Rembrandt Paint Company
Income Statement
For the Year Ended December 31, 2021
Sales revenue $24,000
Less: Cost of goods sold -$13,500
Gross profit $10,500
Less:
Operating expenses
Selling and administrative -$3,100
Restructuring costs -$1,400
Operating Income $6,000
Add: Interest revenue $220
Less: Interest expense -$420
Income from Continuing operations before income tax expense and extra ordinary item $5,800
Less: Income tax expense (25%) -$1,450
Income from Continuing operations before extraordinary item $4,350
Discontinued Operations
Income from operations of discontinued components ($3,200 - $2,200) $1,000
Less: Income tax expense (25%) $250
Income from Discontinued operations $750
Income before extraordinary items $5,100
Extraordinary item $0
Net Income $5,100
Earning per share
Income from Continuing operations before extraordinary item ($4,350 ÷ 600 shares) $7.25
Income from Discontinued operations ($750 ÷ 600 shares) $1.25
Extraordinary item 0
Net Income $8.50
We simply deduct all types of expenses and added all types of incomes
Presented below is information available for Concord Corporation. Current Assets Cash $ 4500 Short-term investments 50500 Accounts receivable 66000 Inventory 86000 Prepaid expenses 35000 Total current assets $ 242000 Total current liabilities are $50000. The acid-test ratio for Concord is:
Answer:
2.42 times
Explanation:
The computation of the acid test ratio is shown below:
Acid test ratio = Quick Assets ÷ Current liabilities
where,
Quick Assets = Cash + short term investment + account receivable
= $4,500 + $50,500 + $66,000
= $121,000
And, the current liabilities is $50,000
So the acid test ratio is
= $121,000 ÷ 50,000
= 2.42 times
Basically we applied the above formula to find out the acid test ratio
Last year Ann Arbor Corp had $250,000 of assets (which equals total invested capital), $305,000 of sales, $20,000 of net income, and a debt-to-total-capital ratio of 37.5%. The new CFO believes that a new computer program will enable the company to reduce costs and thus raise net income to $33,000. The firm finances using only debt and common equity. Assets, total invested capital, sales, and the debt to capital ratio would not be affected. By how much would the cost reduction improve the ROE
Answer:
8.32%
Explanation:
The computation of cost reduction improve the ROE is shown below:-
For computing the increase in ROE first we need to follow some steps which is here below:-
Debt = capital × Debt
= $250,000 × 37.5%
= $93,750
Equity = Assets - Debt
= $250,000 - $93,750
= $156,250
New ROE = New Net income ÷ Equity
= $33,000 ÷ $156,250
= 21.12%
Old ROE = Old Net income ÷ Equity
= $20,000 ÷ $156,250
= 12.8%
Increase in ROE = New ROE- Old ROE
= 21.12% - 12.8%
= 8.32%
In the month of March the Digby Corporation received and delivered orders of 189,000 units at a price of $15.00 for revenue of $2.835mil for their product Deal. Digby uses the accrual method of accounting and offers 30 day credit terms. By the end of May Digby had collected payments of $2.835mil for the March deliveries. How much of the collected $2.835mil should Digby show on the March 31st income statement and how much on the May 31st income statement?
Answer:
$2.835 in March and $0 in May.
Explanation:
As per the data given in the question,
The actual method of accounting is that the revenue is not recognized in the period when the actual cash is received but the period in which it is earned.Hence, May-31 income statement will not recognize any part of revenue and March-31 income statement will recognize the whole revenue of $2.835 million.
Hence, $2.835 in March and $0 in May.
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
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.
The following data pertain to last year's operations at Tredder Corporation, a company that produces a single product: Units in beginning inventory 0 Units produced 20,000 Units sold 19,000 Selling price per unit $100.00 Variable costs per unit: Direct materials $12.00 Direct labor $25.00 Variable manufacturing overhead $3.00 Variable selling and administrative $2.00 Fixed expenses per year: Fixed manufacturing overhead $500,000 Fixed selling and administrative $600,000 What was the absorption costing net operating income last year?
Answer:
Net operating income= 27,000
Explanation:
Giving the following information:
Units produced 20,000
Units sold 19,000
Selling price per unit $100.00
Variable costs per unit:
Direct materials $12.00
Direct labor $25.00
Variable manufacturing overhead $3.00
Variable selling and administrative $2.00
Fixed expenses per year:
Fixed manufacturing overhead $500,000
Fixed selling and administrative $600,000
Under the absorption costing method, the fixed manufacturing overhead gets included in the unitary production cost. First, we need to calculate the unitary product cost.
Unitary product cost= (12 + 25 + 3) + (500,000/20,000)
Unitary product cost= 40 + 25= $65
Income statement:
Sales= 100*19,000= 1,900,000
COGS= 65*19,000= (1,235,000)
Gross profit= 665,000
Variable selling and administrative= (2*19,000)=(38,000)
Fixed selling and administrative= (600,000)
Net operating income= 27,000
Donovan company incurred the following costs while producing 2000 units: Direct Materials, $15 per unit; direct labor, $5 per unit; variable manufacturing overhead, $12 per unit; variable selling and administrative costs, $14, per unit; total fixed overhead costs, $20,000; total fixed selling and administrative costs, $10,000. There are no beginning inventories.
What is the unit productive cost using absorption costing?
a. $32 per unit
b. $42 per unit
c. $52 per unit
d. $61 per unit
What is the unit product cost using variable costing?
a. $32 per unit
b. $44 per unit
c. $46 per unit
d. $61 per unit
What is the operating income using absorption costing if 1800 units are sold for $100 each?
a. $104,400
b. $96,000
c. $79,200
d. $69,200
What is the operating income using variable costing if 1900 units are sold for $100 each?
a. $57,400
b. $72,600
c. $80,200
d. $102,600
*Formulas or explanations with each part of the problem.
Answer:
1. b. $42 per unit
2. a. $32 per unit
3. d. $69,200
4. b $72,600
Explanation:
1 and 2 The computation of unit productive cost using absorption costing and unit product cost using variable costing is shown below:-
Absorption Variable
Direct material $15 $15
Direct labor $5 $5
Variable manufacturing
overhead $12 $12
Fixed manufacturing
overhead $10
($20,000 ÷ 2000)
Product cost $42 $32
Therefore for computing the product cost of absorption and variable cost we simply added direct material, direct labor, variable manufacturing overhead and fixed overhead rate
3. The computation of the unit product cost using variable costing is shown below:-
Sales $180,000
Cost of goods manufactured ($756,00)
(1800 × $42)
Difference $104,400
Variable and selling
administrative ($25,200)
(1800 × $14)
Gross profit $79,200
Fixed selling and administrative
expenses ($10,000)
Net operating income $69,200
So, for computing the net operating income we simply deduct the Fixed selling and administrative expenses from gross profit.
4. The computation of operating income using variable costing is shown below:-
Sales $190,000
(1,900 × $100)
Variable cost of goods
manufactured $60,800
(1,900 × $32)
Gross contribution margin $129,200
Variable and selling administrative ($26,600)
(1900 × $14)
Net contribution margin $102,600
Fixed cost ($30,000)
Operating income $72,600
Therefore for computing the operating income using variable costing we simply deduct the fixed cost from net contribution margin.
