On January 1, 2021, Badger Inc. adopted the dollar-value LIFO method. The inventory cost on this date was $101,600. The ending inventory, valued at year-end costs, and the relative cost index for each of the next three years is below:

Year-end Ending inventory at year-end costs Cost Index
2021 $131,040 1.05
2022 150,040 1.10
2023 160,320 1.20

In determining the inventory balance for Badger to report in its 12/31/2022 balance sheet: _____________-

a. An additional layer of $12,760 is added to the 12/31/2021 balance.
b. An additional layer of $24,760 is added to the 12/31/2021 balance.
c. An additional layer of $23,760 is added to the 12/31/2021 balance.
d. None of these answer choices are correct.

Answers

Answer 1

Answer:

a. An additional layer of $12,760 is added to the 12/31/2021 balance.

Explanation:

The computation of the inventory balance is given below:

2021 Base year cost is

=  $131,040 ÷ 1.05

= $124,800

Additional layer is

= $124,800 - $101,600

= $23,200

2022 Base year cost is

= $150,040 ÷ 1.10

= $136,400

Additional layer is

= ($136,400 - $124,800 ) × 1.10

= $11,600  1.10

= $12,760

Therefore the first option is correct


Related Questions

Suppose you borrow $9,875 and then repay the loan by making 12 monthly payments of $863.58 each. What is the effective annual rate (EAR) you are paying

Answers

Answer:

9.38%

Explanation:

PV = $9,875

PMT = $863.58

NPER = 12

Using the MS Rate Function to derive the Periodic rate

Periodic rate = Rate(NPER, -PMT, PV)

Periodic rate = Rate(12, -863.58, 9,875)

Periodic rate = 0.0075

Periodic rate = 0.75%

Nominal rate = Periodic rate * NPER

Nominal rate = 0.75% * 12

Nominal rate = 9%

Using the MS Effect Function to derive the effective annual rate (EAR)

Nominal rate = 9%

NPER = 12

Effective annual rate (EAR) = Effect(Nominal rate, NPER)

Effective annual rate (EAR) = Effect(9%, 12)

Effective annual rate (EAR) = 0.0938

Effective annual rate (EAR) = 9.38%

So, the the effective annual rate (EAR) you are paying is 9.38%.

Grays Company has inventory of 25 units at a cost of $6 each on August 1. On August 3, it purchased 35 units at $11 each. 27 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 27 units that were sold?

Answers

Answer:

$174

Explanation:

Calculation to determine what amount will be reported as cost of goods sold for the 27 units that were sold

Cost of goods sold=(25 units*$6) + [(25 units -27units)*$12]

Cost of goods sold =$150+$24

Cost of goods sold=$174

Therefore the amount that will be reported as cost of goods sold for the 27 units that were sold is $174

Rank the following three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 9 percent and standard deviation of 40 percent. The average return and standard deviation of WholeMart are 10 percent and 22 percent; and of Fruit Fly are 15 percent and 45 percent.

a. Fruit Fly, Night Ryder, WholeMart
b. Night Ryder, WholeMart, Fruit Fly
c. Night Ryder, Fruit Fly, WholeMart
d. WholeMart, Fruit Fly, Night Ryder

Answers

A. Fruit fly, mighty Ryder, whilemwrt

Fruit Fly, Night Ryder, WholeMart is the three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 9 percent. Hence, option A is correct.

What is standard deviation?

The term "standard deviation" (or "") refers to a measurement of the data's dispersion from the mean. A low standard deviation implies that the data are grouped around the mean, whereas a large standard deviation shows that the data are more dispersed.

Example: How many people had scores on a recent test that were lower than yours, which was 0.5 standard deviations above the mean? 19.1% falls between 0 and 0.5. 50% is less than zero.

A low standard deviation indicates that the data are tightly grouped around the mean, while a high standard deviation indicates that the data are widely dispersed (less dependable) (more reliable).

Thus, option A is correct.

For more information about standard deviation, click here:

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QS 5-6 Perpetual: Inventory costing with weighted average LO P1 A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 350 units. Ending inventory at January 31 totals 150 units. Units Unit Cost Beginning inventory on January 1 320 $ 3.00 Purchase on January 9 80 3.20 Purchase on January 25 100 3.34 Required: Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the weighted average method. (Round your per unit costs to 2 decimal places.)

Answers

Answer:

Perpetual Inventory Company

The cost assigned to ending inventory based on the weighted average method is:

= $465 ($3.10 * 150)

Explanation:

a) Data and Calculations:

                                                           Units Unit Cost   Total Cost

Beginning inventory on January 1    320   $ 3.00             $960

Purchase on January 9                       80      3.20                256

Purchase on January 25                   100      3.34                 334

Total available for sale                     500       3.10            $1,550

Sale on January 26                         (350)      3.10              1,085

Ending inventory on January 31       150       3.10                465

Somerset Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $62 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 45% of direct labor cost. The unit costs to produce comparable carrying cases are expected to be as follows:

Direct materials $8.00
Direct labor 12.00
Factory overhead (40% of direct labor) 4.80
Total cost per unit $24.80

If Somerset Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 25% of the direct labor costs.

Required:
Prepare a differential analysis dated April 30 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case.

Answers

Answer:

Somerset Computer Company

Differential Analysis dated April 30:

                                                 Make                  Buy      

                                            Alternative 1    Alternative 2    Difference

Variable cost per unit           $23.00                $62.00           $39.00

Explanation:

a) Data and Calculations:

Purchase price per portable computer carrying case = $62

Unit cost of production:

Direct materials                                     $8.00

Direct labor                                            12.00

Factory overhead (40% of direct labor) 4.80

Total cost per unit                              $24.80

Unit cost of production, with overhead broken into fixed and variable:

Direct materials                                     $8.00

Direct labor                                            12.00

Factory overhead

Fixed overhead                                       1.80

Variable overhead                                 3.00

Total cost per unit                             $24.80

b) With a net gain of $39 per unit, the company should make the unit (Alternative 1) instead of buying it (Alternative 2).

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case.
(a) Credit balance of $300 in Allowance for Doubtful Accounts just prior to adjustment. Analysis of Accounts Receivable indicates uncollectible receivables of $8,500.
(b) Credit balance of $500 in Allowance for Doubtful Accounts just prior to adjustment. Uncollectible receivables are estimated at 2% of credit sales, which totaled $1,000,000 for the year.

Answers

Answer:

a. Credit balance in the Allowance for Doubtful Accounts and already balance in Allowance account = $300

Estimated Doubtful accounts and balance maintained with Allowance for Doubtful Accounts= $8,500

Amount added to the Allowance for Doubtful Accounts = $8,500 - $300

Amount added to the Allowance for Doubtful Accounts = $8,200

Ending balance maintained with Allowance for Doubtful Accounts = $8,500

b. Credit balance in the Allowance for Doubtful Accounts and already balance in Allowance account = $500

Estimated Doubtful accounts and balance maintained with Allowance for Doubtful Accounts = $1,000,000 * 2% = $20,000

Ending balance maintained with Allowance for Doubtful Accounts = $20,000 + $500 = $20,500

Suppose Valley Technology has the following results related to cash flows for 2020:

Decrease in Debt of $1,000,000
Dividends Paid of $200,000
Purchases of Property, Plant, & Equipment of $5,700,000
Other Adjustments from Financing Activities of $100,000
Other Adjustments from Investing Activities of $900,000

Assuming no other cash flow adjustments than those listed above, create a statement of cash flows for investing and financing activities with amounts in thousands.

Required:
What is the Net Cash Flow from Investing and Financing Activities?

Answers

Answer:

Valley Technology

Statement of Cash Flows (in thousands):

Investing activities:

Other Adjustments from Investing Activities      $900

Financing activities:

Decrease in Debt of                                          ($1,000)

Dividends Paid of                                                ($200)  

Other Adjustments from Financing Activities of $100

Net cash flow from financing activities               (1,100)

Net cash flows                                                    ($200)

Explanation:

a) Data and Calculations:

Decrease in Debt of $1,000,000

Dividends Paid of $200,000

Purchases of Property, Plant, & Equipment of $5,700,000

Other Adjustments from Financing Activities of $100,000

Other Adjustments from Investing Activities of $900,000

During its fiscal year, a Pension Trust Fund buys 1,000 shares of stock, for which it pays $33,000. At year end, the stock has a fair value of $28,000. How should this fact be reported in the Trust Fund's financial statements?a. the investment should be reported at a value of $33,000.
b. the investment should be reported at a value of $33,000, and the loss in market value should be reported in a footnote.
c. the investment should be reported at a value of $30,500.
d. the investment should be reported at a value of $28,000.

Answers

Answer: d. the investment should be reported at a value of $28,000.

Explanation:

Investments should be recorded at their fair value in the financial statements. If a loss is made but the company is still holding on to the investment then the loss is unrealized which is the case here.

When there is an unrealized loss, it is to be debited to the Unrealized loss account and credited to the investment account to show that it is reducing. This will then leave the balance of the investment account at the fair value which in this case is $28,000.

Evaluate whether all of the following are considered to be investment (I) in calculating GDP.

a. The purchase of a new automobile for private, non-business use
b. The purchase of a new house
c. The purchase of corporate bonds

Answers

Answer:

only the purchase of a new house would be considered investment spending of the three options

Explanation:

Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year

GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export  

Consumption spending includes spending by households on goods and services. Consumption spending includes :  

spending on durables - e.g. laptop  

spending on nondurables - e.g. clothes, food

spending on services  - e.g. payment of hospital bill  

the purchase of a textbook by a student is an example of consumption spending on durable goods

Investment - It includes purchases of goods and services made by businesses in the production of goods and services

Government spending - It includes government consumption expenditure and gross investment.  The purchase of a new  limousine for the president is an example of consumption expenditure

The purchase of a new automobile for private, non-business use is an example of consumption spending on durables

The purchase of a new house is an example of investment spending

The purchase of corporate bonds is not included in the calculation of GDP

Say that Fed policy requires all banks to hold 8% of deposits in reserves. If Ventura Bank does not hold any excess reserves and the Fed increases the reserve requirement to 10%, what will be the result

Answers

Answer:

the money supply decreases

Explanation:

Reserve ratio is the percentage of deposits that is required of commercial banks to keep as reserves. The higher the ratio, the lower the money supply

For example, assume reserve ratio is initially 8% of deposits. It is later reduced to  10%. 1000 is deposited

Increase in money supply = deposit / reserve ratio

1000 / 0.08 = 12,500

1000 / 0.1  = 10,000

It can be seen the money supply decreased when reserve ratio was increased from 8% to 10%

The Dominican Republic and Nicaragua both produce coffee and rum. The Dominican Republic can produce 25 thousand tons of coffee per year or 5 thousand barrels of rum. Nicaragua can produce 18 thousand tons of coffee per year or 3 thousand barrels of rum. Suppose the Dominican Republic and Nicaragua sign a trade agreement in which each country would specialize in the production of either coffee or rum.

RequireDd
a. Which country should specialize in coffee?
b. Which country should specialize in rum?

Answers

Answer:

a. Nicaragua

b, Dominican Republic

Explanation:

A country should specialise in the production of goods for which it has a comparative advantage in its production

A country has comparative advantage in production if it produces at a lower opportunity cost when compared with other countries.

The Dominican Republic

opportunity cost of producing rum = 25,000 / 5000 =  5

opportunity cost of producing coffee = 5000 / 25000 = 0.2

Nicaragua

opportunity cost of producing rum = 6

opportunity cost of producing coffee = 0.17

The Dominican Republic has a lower opportunity cost in the production of rum. It should specialise in the production of rum

Nicaragua has a lower opportunity cost in the production of coffee. It should specialise in the production of coffee

International trade in goods and services is a major component of the globalization process.

a. True
b. False

Answers

it’s true periodddddddddddd

Consider the following information for Maynor Company, which uses a periodic inventory system: Transaction Units Unit Cost Total Cost January 1 Beginning Inventory 21 $ 71 $ 1,491 March 28 Purchase 31 77 2,387 August 22 Purchase 42 81 3,402 October 14 Purchase 47 87 4,089 Goods Available for Sale 141 $ 11,369 The company sold 47 units on May 1 and 42 units on October 28. Required: Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods. FIFO LIFO Weighted Average

Answers

Answer:  

FIFO LIFO WEIGHTED AVERAGE  

Ending inventory   4494 3878 4193  

Cost of Goods Sold   6875 7491 7176  

Explanation:

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO          

RECIEPTS   COST OF GOODS SOLD   BALANCE  

DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $

balance   21 71 1491 21 71 1491    

Purchasse          

28-Mar 31 77 2387 31 77 2387    

22-Aug 42 81 3402 37 81 2997 5 81 405

14-Oct 47 87 4089    47 87 4089

TOTAL 141  11369 89  6875 52  4494

         

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO          

RECIEPTS   COST OF GOODS SOLD   BALANCE  

DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $

balance   21 71 1491    21 71 1491

Purchasse          

28-Mar 31 77 2387    31 77 2387

22-Aug 42 81 3402 42 81 3402    

14-Oct 47 87 4089 47 87 4089    

TOTAL 141  11369 89  7491 52  3878

         

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE          

RECIEPTS   COST OF GOODS SOLD   BALANCE  

DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $

balance   21 71 1491      

Purchasse          

28-Mar 31 77 2387      

22-Aug 42 81 3402      

14-Oct 47 87 4089      

TOTAL 141 80.63 11369 89 80.63 7176 52 80.63 4193

         

a)What are the expected returns and standard deviations of a portfolio consisting of:1.100 percent in stock A

Answers

Answer:

12%

1.00

Explanation:

Note that the expected return on stock A which is 12% is missing from the question as well as the standard deviation of A which is 1.00

The expected return from stock A with 100% of funds(total amount of investment) invested in stock A is the percentage invested in A multiplied by the expected return of stock  A shown thus:

expected return=100%*12%

portfolio expected return=12%

portfolio standard deviation(if 100% invested in A)=1.00*100%

An individual in the 36 percent tax bracket has $20,000 invested in a tax-exempt account. If the individual earns 10 percent annually before taxes and inflation is 3.0 percent per year, what is the real value of the investment in 10 years?

Answers

Answer:

the  real value of the investment in 10 years is $38,614

Explanation:

The computation of the real value of the investment is given below:

but before that the rate of return is

= (1.10) ÷ (1.03) - 1

= 6.8%.

Now the

Future value  

= $20,000 × (1 + 0.068)^10

= $38,613.80

Hence, the  real value of the investment in 10 years is $38,614

The same should be calculated

Suppose that a competitive​ firm's marginal cost of producing output q​ (MC) is given by MC (q )equals6plus2 q. Assume that the market price​ (P) of the​ firm's product is ​$18 . What level of output​ (q) will the firm​ produce? The firm will produce nothing units of output. ​(Enter your response rounded to two decimal places.​)

Answers

Answer:

The firm will produce 6.00 units of output.

Explanation:

From the question, we have:

MC(q) = 6 + 2q ……………… (1)

P = $18 ………………………. (2)

For any firm, profit is maximized when MC = P. To determine the level of output (q) the firm will produce, we therefore equate equations (1) and (2) and solve for q as follows:

6 + 2q = 18

2q = 18 - 6

2q = 12

q = 12 / 2

q = 6.00

Therefore, the firm will produce 6.00 units of output.

Suppose you buy some stock in the Alpha Corporation at a price of $45.95 per share. 410 days later you sell the stock for $48.27. During this period you received a per share dividend of $1.20. What is your annualized return on this investment

Answers

Answer: 6.79%

Explanation:

The holding period return is:

= (Current price - Cost price + Dividend) / Cost price

= (48.27 - 45.95 + 1.20) / 45.95

= 7.66%

The annualized return is:

= ( ( 1 + holding period return) ^ number of days in a year/ number of days stock was held - 1)

= ( ( 1 + 7.66%) ³⁶⁵ / ⁴¹⁰ - 1)

= 6.79%

Use the starting balance sheet and the list of changes to create an updated balance sheet and to answer the question.

Valley Technology Balance Sheet As of December 31, 2020 (amounts in thousands)
Cash 2,200 Liabilities 3,600
Other Assets 2,800 Equity 1,400
Total Assets 5,000 Total Liabilities 5,000

Between January 1 and March 31, 2021:

1. Cash decreases by $200,000
2. Liabilities decrease by $100,000
3. Equity increases by $400,000

What is the value for Other Assets on March 31, 2021?

Answers

Answer: $3,300,000

Explanation:

Accounting formula:

Assets = Equity + Liabilities

Total equity and liabilities on March 31 is:

= Beginning balance - decrease in liabilities + Increase in Equity

= 5,000,000 - 100,000 + 400,000

= $5,300,000

Assets therefore has to be $5,300,000 on the same date.

Assets = New cash balance + Other assets

5,300,000 = (2,200,000 - 200,000) + Other assets

Other assets = 5,300,000 - 2,000,000

= $3,300,000

A state's lottery winner is promised $200,000 a year for twenty years (starting at the end of the first year). How much must the state invest now to guarantee the prize if the state can earn annually 7 percent on its funds? How much must the state invest if the annual payments were made at the beginning of the year?

Answers

Answer and Explanation:

The computation is shown below:

The amount that should be invested in the case when it earns 7% on its funds is

Investment = pv(7%,20,200000,0,0)

= $2,118,802.85

ANd, the amount that should be invested at the starting of the year is

= pv(7%,20,200000,0,1)

= $2,267,119.05

The same should be considered

Kiwi Plc sold an antique painting which had been purchased inJanuary 1996 for £21,000. It was sold for £4,200 in January 2021. The proceeds were received net of auction fees of £650. What is Kiwi Plc's allowable loss?​

Answers

Answer:

$17,450

Explanation:

The antique painting that was bought in January 1996 was sold for $21,000

It was sold for 4,200 in January 2021

It received a net auction fee of 650

Therefore the allowable loss can be calculated as follows

= 21,000-4200+650

= 17,450

Hence the allowable loss is $17,450

Stacy Cool wants to invest her money to earn at least 14%. A friend who is interested in investments has suggested her to buy a bond issued by the Buckeye Bravo Company that will mature in seven years. It has a face value of $1,000, pays an annual coupon of $110, and currently sells for $950. Should she buy this bond

Answers

Answer:

no

the yield to maturity is 12% which is less than 14%

Explanation:

To determine if Stacy should buy the bond, determine the yield to maturity of the bond

yield to maturity can be determined using a financial calculator

Cash flow in year 0 = -950

Cash flow in year 1 - 6 = 110

Cash flow in year 7 = 110 + 1000

YTM = 12.1%

The YTM is less than the minimum return she wants. So, she should not buy the bond

To determine YTM using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

To determine YTM using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

A select list of transactions for Goals​ follows:
For each​ transaction, identify what type of adjusting entry would be needed. Select from the following four types of adjusting​ entries: deferred​ expense, deferred​ revenue, accrued​ expense, and accrued revenue.
Apr. 1 Paid six months of rent, $4,800.
10 Received $1,200 from customer for six month service contract that began April 1.
Apr. 15 Purchased a computer for $1,000.
Apr. 18 Purchased $300 of office supplies on account.
Apr. 30 Work performed but not yet billed to customer, $500
Apr. 30 Employees earned $600 in salaries that will be paid May 2.

Answers

Answer:

Goals

Identification of Needed Adjusting Entry:

Transaction                                                          Adjusting Entry Type

Apr. 1 Paid six months of rent, $4,800.              Deferred expense

Apr. 10 Received $1,200 from customer for      Deferred revenue

six month service contract that began April 1.

Apr. 15 Purchased a computer for $1,000.        Deferred expense

Apr. 18 Purchased $300 of office

supplies on account.                                          Accrued expense

Apr. 30 Work performed but not yet

billed to customer, $500                                   Accrued revenue

Apr. 30 Employees earned $600 in                  Accrued expense

salaries that will be paid May 2.

Explanation:

Four types of adjusting​ entries:

Goal's deferred​ expense refers to an expense that Goal will incur in future periods but already paid for.

Goal's deferred​ revenue includes its revenue received in advance of service.

Goal's accrued​ expense refers to an expense that has been incurred but not yet paid for.

Goal's accrued revenue includes revenue that has been earned but not yet received.

If Marjorie makes an investment of principal, and leaves the full amount, both principal and interest in the account to some time in the future when she withdraws all funds, she is earning what type of interest

Answers

Answer: Compounding

Explanation:

Based on the information given, we can infer that Marjorie earns a compounding interest. The compound interest is the interest on a loan that is calculated based on the initial principal as well as the interest that is accumulated from the previous periods. In compounding interest, the interest is earned on the principal and the interest amount. The compounding interest is also referred to as the interest on interest.

U.S. real gross domestic product changed from $14.6 trillion in 2006 to $14.4 trillion in 2009. During that same time period, the share of manufactured goods (e.g., cars, appliances) of U.S. real gross domestic product was 12.8 percent in 2006 and 12.0 percent in 2009. What was the dollar value of manufactured output Instructions: Enter your responses rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. In 2006

Answers

Answer:

Missing word "b. In 2009"

a. Dollar value (2006) = Real GDP (2006) * Share of manufacturing goods (2006) / 100

Dollar value (2006) = 14.6 * 12.8 / 100

Dollar value (2006) = 186.88 / 100

Dollar value (2006) = $1.8688 trillion

Dollar value (2006) = $1.87 trillion

Thus, the dollar value of manufactured output in 2006 is $1.9 trillion

b. Dollar value (2009) = Real GDP (2009) * Share of manufacturing goods (2009) / 100

Dollar value (2009) = 14.4 * 12.0 / 100

Dollar value (2009) = 172.8 / 100

Dollar value (2009) = $1.728 trillion

Dollar value (2009) = $1.73 trillion

Thus, the dollar value of manufactured output in 2009 is $1.7 trillion

​Tri-County G&T sells 145,000 MWh per year of electrical power to Boulder at ​$ per​ MWh, has fixed costs of ​$ million per​ year, and has variable costs of ​$ per MWh. If​ Tri-County has MWh of demand from its customers​ (other than​ Boulder), what will​ Tri-County have to charge to break​ even?

Answers

Answer:

$105.85

Explanation:

Given that :

Fixed cost = $83.1 million

Variable cost = $30 / MWh

Number of demand, $1,000,000 MWh

Variable cost to other customers =[(1,000,000 + 145000) * $30) = $34350000

To break even :

Total Cost = Total revenue

(fixed Cost + variable cost) = total revenue

Let amount per MWh required to break even = x (amount sold to other customers)

(83100000 + 34350000) = (145000*80 + 1000000x)

117450000 = 11600000 + 1000000x

117450000 - 11600000 = 1000000x

105850000 = 1000000x

x = 105850000 / 1000000

x = $105.85

Wildhorse Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2022.

1. Purchased a 1-year insurance policy on June 1 for $2,220 cash.
2. Paid $7,020 on August 31 for 5 months’ rent in advance.
3. On September 4, received $3,960 cash in advance from a corporation to sponsor a game each month for a total of 9 months for the most improved students at a local school.
4. Signed a contract for cleaning services starting December 1 for $1,080 per month. Paid for the first 2 months on November 30. (Hint: Use the account Prepaid Cleaning to record prepayments.)
5. On December 5, received $1,620 in advance from a gaming club. Determined that on December 31, $515 of these games had not yet been played.

Answers

Question Completion:

Prepare the necessary journal entries.

Answer:

Wildhorse Games Inc.

1. June 1: Debit Prepaid Insurance $2,220

Credit Cash $2,220

To record the payment for 1-year insurance policy.

2. August 31: Debit Prepaid Rent $7,020

Credit Cash $7,020

To record the payment for 5 months’ rent in advance.

3. September 4: Debit Cash $3,960

Credit Unearned Game Revenue $3,960

To record cash received in advance to sponsor a game each month for a total of 9 months.

4. November 30: Debit Prepaid Cleaning $2,16

Credit Cash $2,160

To record the payment for cleaning services for two months.

5. December 5: Debit Cash $1,620

Credit Unearned Games Revenue $1,620

Adjustments on December 31:

1. Debit Insurance Expense $1,295

Credit Prepaid Insurance $1,295

To record insurance expense for the period ($2,220 * 7/12).

2. Debit Rent Expense $5,616

Credit Prepaid Rent $5,616

To record rent expense for the period ($7,020 * 4/5).

3. Debit Unearned Games Revenue $1,760

Credit Earned Games Revenue $1,760

To record earned revenue ($3,960 * 4/9).

4. Debit Cleaning Expense $1,080

Credit Prepaid Cleaning $1,080

To record cleaning expense for the period.

5. Debit Unearned Games Revenue $1,105

Credit Earned Games Revenue $1,105

To record earned revenue.

Explanation:

a) Data and Analysis:

1. June 1: Prepaid Insurance $2,220 Cash $2,220 1-year insurance policy

2. August 31: Prepaid Rent $7,020 Cash $7,020 for 5 months’ rent in advance.

3. September 4: Cash $3,960 Unearned Game Revenue $3,960 to sponsor a game each month for a total of 9 months

4. November 30: Prepaid Cleaning $2,160 Cash $2,160

$1,080 per month. Paid for the first 2 months on November 30.

5. December 5: Cash $1,620 Unearned Games Revenue $1,620

Adjustments on December 31:

1. Insurance Expense $1,295 Prepaid Insurance $1,295 ($2,220 * 7/12)

2. Rent Expense $5,616 Prepaid Rent $5,616 ($7,020 * 4/5)

3. Unearned Games Revenue $1,760 Earned Games Revenue $1,760 ($3,960 * 4/9)

4. Cleaning Expense $1,080 Prepaid Cleaning $1,080

5. Unearned Games Revenue $1,105 Earned Games Revenue $1,105

Soft Lumber has bonds, preferred stock and common stock as its capital components. _____________ is the right most apt to be granted to its preferred shareholders.

Answers

Answer: right to share in company profits prior to other shareholders

Explanation:

The preferred shareholders are paid their dividends before dividends are paid to other common shareholders. The preferred stock also gives no voting rights to the shareholders.

Preferred shareholders are known to have priority over the income of a company right to share in company profits prior to other shareholders.

When you retire, you wish to have $3 million in your retirement account. You decided to add $2,000 every quarter to your retirement account and invest to generate annualized return of 8% from your investment, how many years do you think it will take to have $3 million in the account

Answers

Answer:

43.35 years

Explanation:

Use the following formula to determine the number of years

Future Value of Annuity = Periodic Annuity x ( 1 + Periodic Interest rate )^numbers of periods ) - 1 / Periodic Interest rate

Where

Future Value of Annuity = $3 million = $3,000,000

Periodic Annuity = $2,000 per quarter

Periodic Interest rate = Interest rate x Quarterly fraction = 8%  x 3/12 = 2%

Numbers of periods = n = ?

Placing values in the formula

$3,000,000 = $2,000 x ( 1 + 2% )^n ) - 1 / 2%

$3,000,000 / $2,000 = ( 1 + 2% )^n ) - 1 / 2%

1,500 =  ( 1.02 )^n ) - 1 / 2%

1,500 x 2% = ( 1.02 )^n ) - 1

30 = ( 1.02 )^n ) - 1

30 + 1 = 1.02^n

31 = 1.02^n

Log 31 = n log 1.02

n = Log 31 / Log1.02

n = 173.41

Now calculat ethe nUmbers of years as follow

Numbers of years = n x 3/12

Numbers of years = 173.41 x 3/12

Numbers of years = 43.35 years

Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month’s budget appear below: Selling price per unit $ 24 Variable expense per unit $ 18 Fixed expense per month $ 4,800 Unit sales per month 950 Required: 1. What is the company’s margin of safety? (Do not round intermediate calculations.) 2. What is the company’s margin of safety as a percentage of its sales?

Answers

Answer:

1.150 units

2. 15.79%

Explanation:

Margin of safety is the difference between the current level of profitability and the break-even level. In other words, it is excess of the current level of sales and the break-even sales computed using the formula below:

the margin of safety in units=current level of sales-breakeven sales

break-even sales=fixed expense/contribution margin

fixed expense=$4,800

contribution margin per unit=selling price-variable cost

contribution margin per unit=$24-$18

contribution margin per unit=$6

break-even sales=$4,800/$6

break-even sales units=800 units

the margin of safety in units=950-800

the margin of safety in units=150 units

the margin of safety as a percentage of its sales=150/950

the margin of safety as a percentage of its sales=15.79%

LO, Inc., is considering an investment of $444,000 in an asset with an economic life of five years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $283,100 and $88,800, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 2 percent. The company will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $64,000 in nominal terms at that time. The one-time net working capital investment of $19,500 is required immediately and will be recovered at the end of the project. The corporate tax rate is 24 percent.

Required:
What is the projectâs total nominal cash flow from assets for each year?

Answers

Answer:

LO, Inc.

The project's total nominal cash flow from assets for each year:

                     Revenue            Expenses   Net Cash Flow

Year 1           $283,100          $108,300        $174,800

Year 2           288,762              90,576           198,186

Year 3          294,537               92,388          202,149

Year 4          300,428               94,236         206,192

Year 5          389,937                96,121          293,816

Explanation:

a) Data and Calculations:

Cost of investment in an asset = $444,000

Estimated economic life of the asset = 5 years

Nominal annual revenues for the first year = $283,100

Nominal annual expenses for the first year = $88,800

Annual inflation rate = 2%

Salvage value of the asset = $64,000

One-time net working capital investment = $19,500

Corporate tax rate = 24%

Project's total nominal cash flow from asset for each year:

                     Revenue                            Expenses

Year 1           $283,100                            $108,300 ($88,800+$19,500)

Year 2           288,762 ($283,100 * 1.02)   90,576 ($88,800 * 1.02)

Year 3          294,537 ($288,762 * 1.02)   92,388 ($90,576 * 1.02)

Year 4          300,428 ($294,537 * 1.02)  94,236 ($92,388 * 1.02)

Year 5          306,437 ($300,428 * 1.02)   96,121 ($94,236 * 1.02)

Year  5          83,500   ($64,000 + $19,500) (Salvage value and Working capital recovery)

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