On December 12, 2021, an investment in equity securities costing $77,000 was sold for $94,000. The total of the sale proceeds was credited to the investment in equity securities account. Required: 1. Prepare the journal entry to correct the error, assuming it is discovered before the books are adjusted or closed in 2021. (Ignore income taxes.) 2. Prepare the journal entry to correct the error assuming it is not discovered until early 2022. (Ignore income taxes.)

Answers

Answer 1

Answer:

1.

Dr. Investment Account $17,000

Cr. Gain on Sale             $17,000

2.

Dr. retained Earning      $17,000

Cr. Gain on Sale             $17,000

Explanation:

1.

If an assets is sold more than the book value, then there is a gain on the sales of asset.

Gain on Sale = Sales Proceeds - Book value of Investment = $94,000 - $77,000 = $17,000

As sales proceeds of $94,000 are credited in the Investment account, which needs to be credited by $77,000 only. The excessive amount of $17,000 should be recorded in the Gain on sale account.

2.

Error is not discovered until 2022 and earning for 2021 was transferred to retained earning. So, adjustment should me made in the retained earnings to eliminate the effect.


Related Questions

The following information relates to the pension plan for the employees of Turner Co.: 1/1/20 12/31/20 12/31/21 Projected benefit obligation 9,765,000 10,458,000 14,007,000 Fair value of plan assets 8,925,000 10,920,000 12,054,000 AOCI – net (gain) or loss -0- (1,512,000) (1,680,000) Settlement rate (for year) 11% 11% Expected rate of return (for year) 8% 7% Turner estimates that the average remaining service life is 16 years. Turner's contribution was $1,323,000 in 2021 and benefits paid to retired employees was $987,000. The amount of AOCI (net gain) amortized in 2021 is

Answers

Answer:

The amount of AOCI (net gain) amortized in 2021 is $26,250

Explanation:

In order to calculate the calculate the amount of AOCI (net gain) amortized in 2021 we would have to use the following formula:

amount of AOCI (net gain) amortized in 2021=(AOCI net gain 12/31/20-Corridor amount for 2021)/Average remaining service life

AOCI net gain 12/31/20=$1,512,000  

Corridor amount for 2021=$1,092,000=10,920,000*10%

Average remaining service life=16  

Therefore, AOCI (net gain) amortized in 2021=($1,512,000-$1,092,000)/16

AOCI (net gain) amortized in 2021=$26,250

Oklahoma enacts a law requiring all businesses in the state to donate 10 percent of their profits to Protestant churches that provide services to indigent persons. Price-Lo Mart files a law suit to block the enforcement of the law. The court will probably decide that this law violates: a. the Free Exercise clause. b. the Supremacy clause. c. the Equal Protection clause. d. the Establishment clause.

Answers

Answer: d. the Establishment clause.

Explanation:

The Establishment Clause was put in place as a limitation by the United States Congress to prevent excesses or stop it from passing legislation forcing an establishment, religion, which broadly made it illegal for the government to promote theocracy or promote a specific religion with taxes. As this is the case with the state asking business to donate 10% of their profit to Protestant.

Answer:

The establishment clause.

Explanation:

Establishment clause, also called establishment-of-religion clause, clause in the First Amendment to the U.S. Constitution forbidding Congress from establishing a state religion. It prevents the passage of any law that gives preference to or forces belief in any one religion. It is paired with a clause that prohibits limiting the free expression of religion.

As the citizenry became more diverse, however, challenges arose to existing laws and practices, and eventually, the Supreme Court was called upon to determine the meaning of the establishment clause.

Though not explicitly stated in the First Amendment, the clause is often interpreted to mean that the Constitution requires the separation of church and state.

A bidding firm, A, is worth $27,000 as a stand-alone entity. A target firm, B, is worth $12,000 as a stand-alone entity, but $18,000 if it is acquired and integrated with Firm A. Several other firms are interested in acquiring Firm B, and Firm B is also worth $18,000 if it is acquired by these other firms. If A acquired B, would this acquisition create value? If yes, how much? How much of this value would the equity holders of A receive? How much would the equity holders of B receive?

Answers

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

Firm A’s worth as a stand-alone entity = $27,000

Firm B’s worth as a stand-alone entity = $12,000

But if Firm A acquired Firm B it’s increase worth of Firm B at $18000.

Firm A is acquired Firm B, this acquisition create value of

= $18,000 - $12000

= $6000.

With this acquisition equity holders of Firms received $18,000 which is $6,000 more than Firm B stand alone.

If a firm has retained earnings of $2.7 million, a common shares account of $4.7 million, and additional paid-in capital of $9.4 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity.

Answers

Answer:

Change in retained earnings = $1.02 million (Decrease)

Change in common shares account = $5.17 million (Increase)

Change in additional paid-in capital = $10.61 million (Increase)

Explanation:

Given:

Retained earnings = $2.7 million

Common shares account = $4.7 million

Additional paid-in capital = $9.4 million

Stock dividend = 10%

Find:

Changes in account.

Computation:

1. Change in retained earnings

Change in retained earnings = Retained earnings - (Retained earnings - Common shares account - Additional paid-in capital)Stock dividend

Change in retained earnings = $2.7 million - ($2.7 million - $4.7 million - $9.4 million)10%

Change in retained earnings = $2.7 million - 1.68 million

Change in retained earnings = $1.02 million (Decrease)

2. Change in common shares account

Change in common shares account = Common shares account (1+Stock dividend)

Change in common shares account = $4.7 million (1+10%)

Change in common shares account = $5.17 million (Increase)

3. Change in additional paid-in capital

Change in additional paid-in capital = Additional paid-in capital + (Additional paid-in capital + Retained earnings)Stock dividend

Change in additional paid-in capital = $9.4 million + ($9.4 million + $2.7 million)10%

Change in additional paid-in capital = $9.4 million + 1.21 million

Change in additional paid-in capital = $10.61 million (Increase)

The student-run newspaper asks students to visit a web page and respond to questions regarding a proposed tuition increase. Only responses to the questions are recorded. Summary statistics based on the survey responses are used in an article published the following week, and no one outside of the newspaper has access to the individual responses. The newspaper's survey is considered to be A) confidential. B) anonymous. C) both anonymous and confidential. D) neither anonymous nor confidential.

Answers

Answer:

C) both anonymous and confidential

Explanation:

As the student-run, the new paper and ask other students to visit a link firm the new paper and respond to those questions and the responses for only those questions were recorded.  This indicates that the newspaper survey is anonymous and confidential as the ant student can fill the survey and the information that is confidential as none outside the newspaper has access to those responses.

Dexter Industries purchased packaging equipment on January 8 for $116,600. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,600. The equipment was used for 8,700 hours during Year 1, 7,380 hours in Year 2, and 3,920 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three years ended December 31 by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. (Note: For STRAIGHT-LINE ONLY, round the first two years to the nearest whole dollar, then round the third year as necessary. For DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar.) 2. What method yields the highest depreciation expense for Year 1

Answers

Answer:

Straight-line method: $36,667 yearly depreciation expense for 3 years. Unit-of-production method: Year 1 - $47,850, Year 2 -  $40,590, Year 3 - $21,560Double-declining method: Year 1 - $77,737, Year 2 -  $25,910, Year 3 - $6,353

Total for 3 years is $110,000 for all the depreciation methods.

Explanation:

(A) Under straight-line method, depreciation expense is (cost - residual value) / Estimated useful life = ($116,600 - $6,600) / 3 years = $36,667 yearly depreciation expense.

Accumulated depreciation for 3 years is $36,667 x 3 years is $110,000.

(B) The unit-of-production method is used when the asset value closely relates to the units of output it is able to produce. It is expressed with the formula below:

(Original Cost - Salvage value) / Estimated production capacity x Units/year

At Year 1, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 8,700 hours = $47,850

At Year 2, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 7,380 hours = $40,590

At Year 3, depreciation expense (DE) is: ($116,600 - $6,600) / 20,000 operating hours x 3,920 hours = $21,560

Accumulated depreciation for 3 years is $47,850 +$40,590 + $21,560 = $110,000.

Note that this depreciation method results in higher depreciation charge when the asset is heavily used, at this time, it was in Year 1.

(C) The double-declining method is otherwise known as the reducing balance method and is given by the formula below:

Double declining method = 2 X SLDP X BV

SLDP = straight-line depreciation percentage

BV = Book value

SLDP is 100%/3 years = 33.33%, then 33.33% multiplied by 2 to give 66.67% or 2/3

At Year 1, 66.67% X $116,600 = $77,737

At Year 2, 66.67% X $38,863 ($116,600 -  $77,737) = $25,910

At Year 3, 66.67% X $12,953 ($38,863 -  $25,910) = $8,636. This depreciation will decrease the book value of the asset below its salvage value $12,953 - $8,636 = $4,317 < $6,600. Depreciation will only be allowed up to the point where the book value = salvage value. Consequently the depreciation for Year 3 will be $6,353.

Accumulated depreciation for 3 years is $77,737 + $25,910 + $6,353 = $110,000.

A division is considering the acquisition of a new asset that will cost $2,950,000 and have a cash flow of $740,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes. Required: a. & b. What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation? What is the residual income each year if the cost of capital is 8 percent?

Answers

Answer and Explanation:

The computation of ROI for each year of the asset's life and residual income each year is shown below:-

Year            Investment base              ROI                   Residual income

1                   $2,950,000                       8%                  -$233,500

2                  $2,212,500                          11%                 -$233,500

3                   $1,475,000                          17%                  -$115,500

4                   $737,500                             34%                 -$56,500

ROI = Net income ÷ Total investment × 100

Net Income = Cash flow - Depreciation

Residual income = Net income - (Investment × Cost of capital)

Depreciation = Investment base ÷ 4 years

The return on investment and the residual income can be find out by using the excel spreadsheet. Kindly find it in the attachment

On January 1, 2021, the Blackstone Corporation purchased a tract of land (site number 11) with a building for $600,000. Additionally, Blackstone paid a real estate brokerâs commission of $36,000, legal fees of $6,000, and title insurance of $18,000. The closing statement indicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition, the building was razed at a cost of $75,000.
Blackstone entered into a $3,000,000 fixed-price contract with Barnett Builders, Inc., on March 1, 2021, for the construction of an office building on land site 11. The building was completed and occupied on September 30, 2022. Additional construction costs were incurred as follows:
Plans, specifications, and blueprints .....................$ 12,000
Architectsâ fees for design and supervision ............95,000
To finance the construction cost, Blackstone borrowed $3,000,000 on March 1, 2021. The loan is payable in 10 annual installments of $300,000 plus interest at the rate of 14%. Blackstoneâs average amounts of accumulated building construction expenditures were as follows:
For the period March 1 to December 31, 2021 ...........$ 900,000
For the period January 1 to September 30, 2022 .......2,300,000
Required:
1. Prepare a schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022.
2. Prepare a schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022.

Answers

Answer:

Blackstone Corporation

1. A schedule that discloses the individual costs making up the balance in the land account in respect of land site 11 as of September 30, 2022:

Cost of Land =              $600,000

Broker's Commission =  $36,000

Legal Fees  =                    $6,000

Title Insurance =              $18,000

Razing of old building =  $75,000

Total  =                          $735,000

2. A schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2022:

Payment to contractor for building =  $3,000,000

Plans, specifications, and blueprints =      $12,000

Architect's fees (design & supervision = $95,000

Capitalized Interest ($3m x14%/10 x 2) = $84,000

Total =                                                    $3,191,000

Explanation:

a) The cost of land to recognize includes the actual cost for the parcel of land, including the building which was razed.  All other expenses incurred ordinarily and necessarily in order to put the land to its intended use are also capitalized.  The costs for the broker's commission, legal fees, title insurance, and razing of old building were incurred ordinarily and necessarily for the land and are therefore capitalized in determining the value of the land.

b) The capitalized interest portion for the building is the interests paid to date.  The contractor's fee, payments for plans, architect's fee, and interests are included as costs of the building.

Fultz Company has accumulated the following budget data for the year 2020.

1. Sales: 31,410 units, unit selling price $85.
2. Cost of one unit of finished goods: direct materials 1 pound at $6 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $7 per direct labor hour.
3. Inventories (raw materials only): beginning, 10,120 pounds; ending, 15,480 pounds.
4. Selling and administrative expenses: $170,000; interest expense: $30,000.
5. Income taxes: 30% of income before income taxes.

Prepare a schedule showing the computation of cost of goods sold for 2020.

Answers

Answer:

COST OF Goods SOLD $ 1,1539,110

Explanation:

Fultz Company

Schedule  of Cost of Goods Sold for 2020

As there are no beginning and ending finished goods inventories the total units produced are sold. (Finished Goods   required       31410  Units)

Inventories raw materials : beginning, 10,120 pounds

Add Direct Materials Purchases 36770 pounds

Less Inventories ending raw materials , 15,480 pounds

Direct Materials Used 31410 pounds

Materials 1 pound at $6 per pound= $ 6*  31410  Units=  $ 188460

Direct labor 3 hours at $12 per hour= $ 36*  31410  Units= $ 1130780

Manufacturing Overhead $7 per direct labor hour= $ 7*  31410  Units=

                                                                                             $ 219870

Total Manufacturing Costs  $ 1,1539,110

There are no beginning and ending work in process inventories so the total manufacturing cost gives us the COST OF Goods SOLD.

One of the key functions of human resource management is

Answers

Answer: recruiting.

Explanation:

Recruiting is one of the most important aspects of human resource management. Hence, Option B is correct.

What is the meaning of Recruiting?

Finding, vetting, recruiting, and eventually onboarding qualified job prospects is the process of recruitment. The process of finding, vetting, shortlisting, and employing potential resources to fill open jobs in a company is known as recruitment.

It serves as a fundamental part of human resource management. The act of selecting the best candidate for a position at the ideal time is known as recruitment.

Simply announcing that you are hiring is all that hiring entails. The deliberate technique of locating and attracting the best individuals for the position is known as recruiting.

Therefore, Option B is correct.

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The complete question has been attached in text form:

One of the key functions of human resource management is:

a. departmentalizing.

b. recruiting.

c. budgeting.

d. auditing.

The following information will be used for 2 questions on this exam: Charlotte Corporation's management keeps track of the time it takes to process orders. During the most recent month, the following average times were recorded per order: Time spent between receipt of order and start of production 3.7 days Time spent ensuring quality levels 0.2 days Time spent working on the product 1.3 days Time spent transporting the product between work stations 0.8 days Time spent waiting to be worked on in the factory 6.9 days What is the throughput time?

Answers

Answer:

6.00 days

Explanation:

data provided

Inspection time = 3.7 days

Process time = 0.2 days

Move time = 1.3 days

Queue time = 0.8 days

The calculation of throughput time is given below:-

Throughput time = Inspection time + Process time + Move time + Queue time

= 3.7 days + 0.2 days + 1.3 days + 0.8 days

= 6.00 days

Here, we added the inspection time, process time , move time and queue time to reach at throughput time and we ignore the time spent waiting to be worked on in the factory as it is not relevant.

Which of the following statements generates the greatest amount of disagreement among economists? a. Increases in the money supply shift aggregate demand to the right. b. In the long run, increases in the money supply increase prices, but not output. c. Recessions are associated with decreases in consumption, investment, and employment. d. Government should use fiscal policy to try to stabilize the economy.

Answers

Answer:

d. Government should use fiscal policy to try to stabilize the economy.

Explanation:

Suggesting that the government should use fiscal policy to try to stabilize the economy generates the greatest amount of disagreement among economists because the process of implementing fiscal policy usually experiences lag as it is being slowed down by the political system (bureaucracy) of checks and balances.

Fiscal policy is the use of government expenditures, revenues and tax policies to influence macroeconomic conditions such as employment, inflation and Aggregate Demand (ADl in a specific country.

The benefits of fiscal policy is that investments, savings and growth is usually influenced in the long-run while it basically influences aggregate demand for goods and services in the short-run.

Now suppose country A imposes a tax on A's production of to curb emissions. Country B, however, is not taxed. A's cost function is now , while B's cost function is . World demand is . The amount of greenhouse gas emissions per unit is still , such that total world emissions are given by . What are total world emissions after country A enacts a carbon tax?

Answers

Answer:

286.5

Explanation:

P=99-qa-qb

MRa=99-2qb-qb

MCa=48

99-2qa-qb=48

Qa=25.5-0.5qb{ best response function of firm A)

MRb=99-qa-2qb

MCb=4

99-qa-2qb=4

Qb=47.5-0.5qa{ best response function of form b}

Qb=47.5-0.5(25.5-0.5qb)

Qb=34.75/0.75=46.33

Qa=25.5-0.5*46.33=2.33

Total world output=46.33+2.33=48.66

Total world emission=0.5*48.66=24.33

p=1146-qa-qb-qc

MRa=1146-2qa-qb-qc

MCa=0

1146-2qa-qb-qc=0

Qa=573-0.5(qb+qc) best response function of firm a)

By symmetry,

Qb=573-0.5(qa+qc)

Qc=573-0.5(qa+qb)

Qb+qc=1146-qa-0.5(qb+qc)

Qb+qc=764-qa/1.5

Qa=573-0.5(764-qa/1.5)=191+qa/3

Qa=191*3/2=286.5

Qa=Qb=Qc=286.5

Total output=3*286.5=859.5( cournot equilibrium market output)

Cartel output=573

Lower QUANTITY in cartel equilibrium compare to cournot equilibrium

=859.5-573

=286.5

Marcellus Company is involved in a lawsuit. Footnote disclosure of the contingent liability which could arise does not have to be presented if the probability of Marcellus owing money as a result of the lawsuit is A) reasonably possible and the amount cannot be reasonably estimated. B) probable and the amount cannot be reasonably estimated. C) reasonably possible and the amount can be reasonably estimated. D) remote and the amount can be reasonably estimated.

Answers

Answer:

The answer is option B) probable and the amount cannot be reasonably estimated.

Explanation:

Contingency liability is the likelihood that a liability might occur sometimes in the future in the face of uncertain circumstances. To validate a contingency liability, the fa cts presented has to be reasonably possible and reasonably estimated.

in the case of Marcellus Company, footnote disclosure of the contingent liability which could arise does not have to be presented if the probability of Marcellus owing money as a result of the lawsuit is probable and the amount cannot be reasonably estimated.

g Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 20Y1, Smiley issued $20,000,000 of five-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $20,811,010. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 20Y1. If an amount box does not require an entry, leave it blank. b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. If an amount box does not require an entry, leave it blank. c. Why was the company able to issue the bonds for $20,811,010 rather than for the face amount of $20,000,000? The market rate of interest is the contract rate of interest.

Answers

Answer:

Explanation:

a

Cash 20811010

Bonds payable 20000000

Premium on Bonds payable 811010

b

Interest expense 818899

Premium on Bonds payable 81101 =811010/5*6/12

Cash 900000 =20000000*9%*6/12

c

The market rate of interest will be lower than the contract rate of interest.

Markley Manufacturing calculated its predetermined overhead rate to be 120% of direct labor cost. During June, the company incurred $90,000 of factory labor costs, of which $85,000 is direct labor and $5,000 is indirect labor. Actual overhead incurred was $84,000. Compute the amount of manufacturing overhead applied during the month. Determine the amount of under- or over-applied manufacturing overhead.

Answers

Answer:

Applied Manufacturing Overheads are $102,000

Overapplied Manufacturing overheads are $18,000

Explanation:

Under or over applied manufacturing overhead can be determined by comparing the actual and applied manufacturing overheads.

Applied overheads can be calculated by multiplying pre-determined overhead rate and actual level of quantity. Predetermined overhead rate is calculated using estimated overhead and estimated activity on which overheads are applied.

In this question the predetermined overhead rate is 120% of direct labor cost.

Applied overhead = Direct labor cost x 120% = $85,000 x 120% = $102,000

Actual overheads incurred = $84,000

Overapplied Manufacturing overheads = $102,000 - $84,000 = $18,000

On 3/1/14 Fox Corp bought back 1,000 shares of their common stock for $15 per share. There were no shares in the treasury prior to that. On 5/23/14 they sold 200 of those shares for $17 each. On 6/19/14 they sold another 400 shares of those shares for $10 per share. Consider writing out all of your entries on scratch paper to assist you in answering questions 31 and 32. What will the remaining balance in the treasury stock account be after all of the above transactions have been recorded

Answers

Answer:

For question (31) $ 6000 (32) The net impact on retained earning is         1600 (Which is a negative

Explanation:

Question 31

                                                 No. Rate   Value

Purchase of Treasury Stock   1000       15              15000  

Less: Sold on 5/23/14              200        15              3000  

Less: Sold on 6/19/14               400        15              6000  

Net remaining value                                                 6000

Note: to calculate the closing value of treasury stock, rate of selling stock need to be taken same as of date of purchase.

For question 31 the answer is $ 6000

Question 32

Impact on retained earning on first sale

                                                         No. Rate     Value

Sale VALUE                                      200 17         3400  

Less: Purchase of Treasury Stock  200 15         3000

Credit Retained earning                                             400

Impact on retained earning on second sale

                                                          No. Rate     Value

Sale VALUE                                       400 10         4000  

Less: Purchase of Treasury Stock   400 15         6000

Debit Retained earning                                            -2000

Net Impact on retained earning         1600 (Negative i.e. Debit)

Therefore the remaining balance in the treasury stock account be after all of the above transactions have been recorded is $6000

Note: Kindly find an attached copy of the complete question to this solution

Consider two independent firms, BU1 and BU2, which transact with each other through spot market transactions in a competitive market. In a typical year, BU1 incurs total costs of $2 million in producing goods that BU2 buys. BU2 would be willing to pay up to $7.5 million for these goods, but because of the competitive market, ends up paying $5 million. What is the value captured by BU1 from these transactions?

Answers

Answer:

Value captured by BU1 = $5.5 million

Explanation:

Given:

Two firm = BU1 , BU2

BU1 cost of production = $2 million

BU2 will able to pay up-to =  $7.5 million

BU2 will pay = $5 million:

Find:

Value captured by BU1 = ?

Computation:

⇒ Value captured by BU1 = BU2 will able to pay up-to - BU1 cost of production

⇒ Value captured by BU1 = $7.5 million - $2 million

Value captured by BU1 = $5.5 million

Based on the information given  the value captured by BU1 from these transactions is $3 million.

The value captured by the seller (BU1)

Seller value =Value BU1 is willing to sell -Value at which he sold

Where:

Value BU1 is willing to sell=$5 million

Value at which he sold=$2 million

Let plug in the formula

Seller value=$5 million-$2 million

Seller value= $3 million

Inconclusion  the value captured by BU1 from these transactions is $3 million.

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All of the following are correct statements about transfers between divisions located in countries with different tax rates except that

A. differences in tax rates across countries complicate the determination of the appro-priate transfer price
B. a decreasing number of transfers are between divisions located in different countries
C. companies must pay income tax in the country where income is generated
D. many companies prefer to report more income in countries with low tax rates.

Answers

I think it’s A .................

All of the following are correct statements about transfers between divisions located in countries with different tax rates except that the companies must pay income tax in the country where income is generated. Thus option (C) is correct.

What is tax?

Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional, or national.

Tax revenues finance government activities, including public works and services such as roads and schools, or programs such as Social Security and Medicare.

In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, such as a business, or the end consumers of the business’s goods.

From an accounting perspective, there are various taxes to consider, including payroll taxes, federal and state income taxes, and sales taxes.

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Haylock Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 7,800 direct labor-hours will be required in August. The variable overhead rate is $1.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,560 per month, which includes depreciation of $8,790. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Answers

Answer:

Total cash= $101,130

Explanation:

Giving the following information:

Estimated direct labor hours=  7,800

The variable overhead rate is $1.20 per direct labor-hour.

The company's budgeted fixed manufacturing overhead is $100,560 per month, which includes depreciation of $8,790.

We need to deduct the depreciation expense because it is not a cash disbursement.

Cash disbursement:

Variable overhead= 7,800*1.2= $9,360

Fixed overhead= (100,560 - 8,790)= $91,770

Total cash= $101,130

The following information is taken from the accounts of Latta Company. The entries in the T-accounts are summaries of the transactions that affected those accounts during the year. Manufacturing Overhead (a) 486,144 (b) 405,120 Bal. 81,024 Work in Process Bal. 10,880 (c) 754,000 298,500 90,500 (b) 405,120 Bal. 51,000 Finished Goods Bal. 39,000 (d) 662,000 (c) 754,000 Bal. 131,000 Cost of Goods Sold (d) 662,000 The overhead that had been applied to production during the year is distributed among Work in Process, Finished Goods, and Cost of Goods Sold as of the end of the year as follows: Work in Process, ending $ 24,480 Finished Goods, ending 62,880 Cost of Goods Sold 317,760 Overhead applied $ 405,120 For example, of the $51,000 ending balance in work in process, $24,480 was overhead that had been applied during the year. Required: 1. Identify reasons for entries (a) through (d). 2. Assume that the underapplied or overapplied overhead is closed to Cost of Goods Sold. Prepare the necessary journal entry. 3. Assume that the underapplied or overapplied overhead is closed proportionally to Work in Process, Finished Goods, and Cost of Goods Sold. Prepare the necessary journal entry.

Answers

Answer and Explanation:

As per the data given in the question,

1.

a) Cost of goods manufactured.

b) Cost of goods sold.

c) Overhead cost applied to work in process

d) Actual manufacturing overhead cost.

2. Journal Entry

Manufacturing overhead A/c Dr. 81,024

To cost of goods sold A/c. 81,024

3.

Work in process ending $24,480 =6.04%

Finished goods ending $62,880 =15.52%

Cost of goods sold $317,760 =78.44%

Total cost $405.120 =100%

To calculate overhead allocation :

Work in process ending = ($81,024× 6.04%) =$4,894

Finished goods ending = ($81,024 × 15.52%) =$12,575

Cost of goods sold = ($81,024 × 78.44%) = $63,355

Total cost = $81,024

Journal Entry

Manufacturing overhead A/c Dr. 81,024

To work in process A/c. $4,893

To finished goods A/c. $12,575

To cost of goods sold A/c. $63,555

Suppose that the standard deviation of monthly changes in the price of commodity A is $2. The standard deviation of monthly changes in a futures price for a contract on commodity B (which is similar to commodity A) is $3. The correlation between the futures price and the commodity price is 0.9. What hedge ratio should be used when hedging a one month exposure to the price of commodity A

Answers

Answer:

0.6

Explanation:

Correlation r = 0.9,

Standard deviation of monthly change in price of commodity A, σA = 2,

Standard deviation of monthly change in price of commodity B, σB = 3

The hedge ratio will be calculated using the formula

Hedge ratio=r×σA÷σB

Hedge ratio=0.9×2÷3

Hedge ratio = 0.6

Therefore, the hedge ratio used when hedging a one month exposure to the price of commodity A is 0.6.

Stone Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent? A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be restated. A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported. A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be presented as previously reported. A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be restated.

Answers

Answer:

A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported.

Explanation:

Since the accounting method is being changed from FIFO to LIFO, any adjusting of prior year balances would be impractical. If the change is from LIFO to FIFO, then it makes more sense to adjust prior year balances. By impractical, it means that any changes would be too difficult and expensive to determine, and the value of the change  is insignificant (materiality principle).

Generally US GAAP rules require that changes from FIFO to LIFO be disclosed in the footnotes only.

Matrix Corporation's balance sheet and income statement appear below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Cash and cash equivalents $ 23 $ 22 Accounts receivable 39 40 Inventory 43 44 Property, plant, and equipment 587 500 Less accumulated depreciation 359 347 Total assets $ 333 $ 259 Liabilities and stockholders' equity: Accounts payable $ 30 $ 26 Accrued liabilities 15 18 Income taxes payable 39 40 Bonds payable 109 120 Common stock 51 50 Retained earnings 89 5 Total liabilities and stockholders' equity $ 333 $ 259 Income Statement Sales $ 972 Cost of goods sold 620 Gross margin 352 Selling and administrative expense 200 Net operating income 152 Gain on sale of equipment 14 Income before taxes 166 Income taxes 50 Net income $ 116 The company sold equipment for $20 that was originally purchased for $7 and that had accumulated depreciation of $1. It paid a cash dividend during the year and did not issue any bonds payable or repurchase any of its own common stock. Required: Determine the net cash provided by (used in) operating activities for the year using the indirect method.

Answers

Answer:

Check the explanation

Explanation:

Cash flow from operating activities:  

Net income                                                                     $116

Adjustment to reconcile net income to cash basis:  

Depreciation expense ($359+1-347)                              $13

Gain on sale of equipment                                              (14)

Decrease in account receivable (40-39)                         $1

Decrease in inventory (44-43)                                          $1

Increase in account payable (30-26)                               $4

Decrease in accrued liabilities (18-15)                              (3)

Decrease in income tax payable (40-39)                         (1)

Net cash flow from operating activities                           $117

Your bagel shop uses both capital and labor in the production of bagels. In this production process capital and labor are substitutes. If you install a new oven and the marginal product of capital increases, you will:

a. reduce the number of workers you employ
b. increase the number of workers you employ
c. reduce the amount of capital you are using not make any changes since you are already maximizing profit

Answers

Answer:

The answer is option A) reduce the number of workers you employ

Explanation:

Installing a new oven is capital intensive. So, for a business person to incur an additional capital cost to aid the efficiency of production, something has to give.

In this case, where capital and labor are substitutes, installing a new oven will drastically reduce the workload thereby necessitating a reduction in the number of workers.

By implication, the cost of paying wages which is a recurrent expenditure will reduce. In the long run and if the oven is maintained, it will e a very cost effective option.

Installing a new oven also suggests a marginal increment in capital.

Hardware is adding a new product line that will require an investment of $ 1 comma 476 comma 000. Managers estimate that this investment will have a​ 10-year life and generate net cash inflows of $ 300 comma 000 the first​ year, $ 290 comma 000 the second​ year, and $ 240 comma 000 each year thereafter for eight years. Assume the project has no residual value. Compute the ARR for the investment. Round to two places

Answers

Answer:

42,51%

Explanation:

Accounting Rate of Return (ARR) = Average Profits / Average Investment

Calculation of Average Profits

Average Profit = Sum of Profits / Number of Years

                        = (300,000+290,000+240,000×8)/10

                        = $2,510,000 / 8

                        = $313,750

Calculation of Average Investment

Average Investment = Initial Investment + Scrape Value / 2

                                  = $1,476,000/2

                                  = $738,000

Accounting Rate of Return (ARR) = $313,750/$738,000×100

                                                      = 42,51%

Check all true statements regarding CMBS:

a.CMBS have less exposure to prepayment risk than RMBS

b.Loans in a CMBS deal are recourse loans The multifamily/apartment CRE sector never uses CMBS for financing as it relies on RMBS

c.CMBS are the main source of financing for commercial real estate loans

d.The number of commercial mortgages in a CMBS deal are usually lower than the number of residential mortgage in a RMBS deal

Answers

Answer: A and D only

Explanation:

CMBS Loan are also referred to as a Conduit Loan, this is a type of real estate loan usually commercial, which is secured by a first-position mortgage on a commercial property. These loans are usually packaged, and sold by a Conduit Lender, commercial banks, investment banks, and syndicates of banks.

Loans in a CMBS are always bigger so they are less in a CMBS deal. Sometimes it’s onlyone loan in a Single Asset (SA) CMBS deal

Prepayments are discouraged in CMBS through defeasance,prepayment penalties or yield maintenance fees.

Answer:

a.CMBS have less exposure to prepayment risk than RMBS

d. The number of commercial mortgages in a CMBS deal are usually lower than the number of residential mortgage in a RMBS deal

Explanation:

Commercial Mortgage-Backed Securities (CMBS) as the name implies are mortgage backed securities that are secured with commercial mortgages while Residential Mortgage-Backed Securities (RMBS) are mortgage backed securities secured by residential property.

a) CMBS are based on mortgages which usually have a fixed term contract in place meaning that prepayment is less of a thing with CMBS than with RMBS so the former does indeed have a less exposure to prepayment risk than the latter.

d) This is indeed true because both packages have to look appealing to investors but can only use different amounts to reach the minimum threshold. This is because Commercial Mortgages pay more than Residential Mortgages so more RMBS have to be pulled together to form an attractive investment as opposed to CMBS. This is why the number in CMBS are usually less than that of RMBS.

Medallion Cooling​ Systems, Inc., has total assets of $9,800,000​, EBIT of $2,050,000​, and preferred dividends of $201,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital​ structure, the firm has assembled data on the cost of​ debt, the number of shares of common stock for various levels of​ indebtedness, and the overall required return on​ investment:

Capital structure/debt Cost of​ debt Number of stock shares Rate of​ return
0% 0% 200,000 12.3%
15 7.8 175,000 13.1
30 9.1 140,000 14.2
45 12.1 111,000 16.3
60 15.2 75,000 20.1

Calculate earnings per share for each level of indebtedness.

Answers

Answer:

Earnings per share:

0% debt = $5.145 per share

15% debt = $5.487 per share

30% debt = $6.203 per share

45% debt =  $6.386 per share

60% debt = $6.570 per share

Explanation:

The earnings per share is the monetary value of how much each share of common stock outstanding has earned. The earnings per share can be calculated by dividing the Net Income attributable to common stockholders by the number of common stock shares outstanding.

Net Income attributable to Common stockholders = Net Income - Preferred stock dividends

Thus, Earnings per share = (Net Income - Preferred stock dividends) / Number of common stock shares outstanding

To calculate Earnings per share at each level of indebtedness, we first need to calculate the net income at each debt level. The net income will change as interest is deducted before calculating net income.

Net Income = EBIT - interest - tax

Total debt = Total assets * weightage of debt in capital structure

Tax = EBT * tax rate

a. 0% debt

Net Income = 2,050,000 - 0 - (2050000 * 0.4) = $1,230,000

Earnings per share = (1230000 - 201000) / 200000   =  $5.145 per share

b. 15% debt

Total debt = 9,800,000 * 0.15 = 1470000

EBT = 2,050,000 - (1470000 * 0.078)  =  $1935340

Net Income = 1935340 - ( 1935340 * 0.4) = $1161204

Earnings per share = (1161204 - 201000) / 175000   =  $5.487 per share

c. 30% debt

Total debt = 9,800,000 * 0.30 = 2940000

EBT = 2050000 - (2940000 * 0.091)   =  $1782460

Net Income = 1782460 - (1782460 * 0.4) = $1069476

Earnings per share = (1069476 - 201000) / 140000   =  $6.203 per share

d. 45% debt

Total debt = 9,800,000 * 0.45 = 4410000

EBT = 2050000 - (4410000 * 0.121)   =  $1516390

Net Income = 1516390 - (1516390 * 0.4) = $909834

Earnings per share = (909834 - 201000) / 111000   =  $6.386 per share

e. 60% debt

Total debt = 9,800,000 * 0.60 = 5880000

EBT = 2050000 - (5880000 * 0.152)  =  $1156240

Net Income = 1156240 - (1156240 * 0.4) = $693744

Earnings per share = (693744 - 201000) / 75000   =  $6.570 per share

Discuss economic theory related to the quote above. Be sure to include a definition of Labor Force Participation Rate (LFPR) within your discussion. Locate and incorporate outside research that gives evidence and explanation as to the possible causes of these declines in the Labor Force Participation rate. Integrate biblical insights into your discussion board thread. In what way does scripture influence our decision to work

Answers

Answer:

The labor force is the group of individuals for employment. The labor force investment rate is the proportion of labor force partitioned by all out populace of the applicable age. As per month to month work survey, the labor force support rate keeps on falling. As indicated by different market analysts, this wonder is because of the blend of segment, basic, and repetitive elements. Also, due to LFPR , the support of youth and the primary age bunch is required to decay. Likewise, the investment paces of laborers of more seasoned age are additionally anticipated to increment, yet remain essentially lower than those of the prime age group. These aspects have applied descending weight on the general labor force support proportion over the 2012–2022 time period and the proportion is relied upon to decrease further, to 61.6% in 2022.  

The drawn out issue of joblessness is because of repetitive and auxiliary reasons, when numerous individuals the segment organization of a nation mirrors the portions of men, ladies, and the distinctive age, race, and ethnic gatherings inside that populace. The case of the time of increased birth rates age in segment change influences the labor force investment rate. Consistently after 2000, the portion of the time of increased birth rates populace has moved into the 55-years-and-more seasoned age bunch which transfers from the principal age gathering to one with considerable lesser investment proportions, origins the general cooperation of the labor force to decay.

Andrews Corporation has income from operations of $253,000. In addition, it received interest income of $25,300 and received dividend income of $28,900 from another corporation. Finally, it paid $13,000 of interest income to its bondholders and paid $47,400 of dividends to its common stockholders. Using the 2013 corporate tax schedule, what is the firm’s federal income tax? Round your intermediated and final answers to the nearest cent. $

Answers

Answer:

$107,122

Explanation:

corporate tax rate during 2013 = 39.1%

Andrews Corporation net taxable income:

from operations $253,000from interests $25,300from dividends $28,900 - dividends received deductions $20,230 = $8,670

Deductions on net taxable income*:

interest paid to bondholders = $13,000

Net taxable income = $286,970 - $13,000 = $273,970

federal income tax = $273,970 x 39.1% = $107,122

*Dividends are paid with retained earnings which include after tax net income. They are not tax deductible.

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