Answer:
1. c. Both of the above
2. a. False
b. True
c. True
d. False
e. True
f. True
3. c. Different firms may use different accounting practices.
Explanation:
Ratio Analysis is one of the method to evaluate a company performance. It helps to analyse a company performance based on different financial metrics. Profitability ratios help to understand company profits position and identify reason for their increase or decrease. Liquidity ratios help understand company's ability to payoff its short term debt obligations.
A small business owner visits his bank to ask for a loan. The owner states that she can repay a loan at $1,500 per month for the next 3 years and then $500 per month for three years after that. If the bank is charging customers 10 percent APR, how much would it be willing to lend the business owner?
Answer:
The bank will be willing to lend $ 28,800 to the business owner.
Explanation:
Given that a small business owner visits his bank to ask for a loan, and the owner states that she can repay a loan at $ 1,500 per month for the next 3 years and then $ 500 per month for three years after that, since the bank is charging customers 10 percent APR, to determine how much the business owner would be willing to lend the following calculation must be performed:
1500 x 12 x 3 + 500 x 12 x 3 = X
18000 x 3 + 6000 x 3 = X
54000 + 18000 = X
72000 = X
10 x 6 = 60
100 - 60 = 40
100 = 72000
40 = X
40 x 72000/100 = X
28800 = X
Therefore, the bank will be willing to lend $ 28,800 to the business owner.
Is scented candle harmful to dogs?
Answer:
Scented candles are not harmful to dogs for normal use, but high concentrations in a confined space for a long time would have an impact on the dog's sense of smell.
Because the candles you use will cause a lot of burnt smoke which is harmful to dogs. And aromatherapy ingredients contain a lot of chemical substances. If the windows are opened, it will be ok, if not the more chemical substances accumulate, the more it will be harmful to dogs, or even to the health of people.
Here are several ways to avoid the harm caused by aromatherapy to dogs:
Do not ignite the two types of aromatherapy in a short time or at the same time, to avoid the two types of aromatherapy, which are mutually ineffective and produce toxic gas.
Try not to light candles in a closed bedroom when you sleep.
Keep air circulation.
Keep all kinds of aromatherapy out of reach of dogs.
Use Home Lights scented candles in the right way.
Explanation:
https://hlcandles.com/
The Wood Valley Dairy makes cheese to supply to stores in its area. The dairy can make 250 pounds of cheese per day (365 days per year), and the demand at area stores is 180 pounds per day. Each time the dairy makes cheese, it costs $125 to set up the production process. The annual cost of carrying a pound of cheese in a refrigerated storage area is $12. Determine the optimal order size and the minimum total annual inventory cost.
Answer: 1. 1170 units
2. $14039
Explanation:
The optimal order size will be:
= ✓2AO/C
where,
A = Annual demand = 180 × 365 days = 65,700
O = Ordering cost = 125
C = Carrying cost = 12
EOQ = ✓(2AO/C)
= ✓(2 × 65700 × 125/12)
= ✓ 1368750
= 1170 units
Therefore, the optimal order size is 1170 units.
2. The minimum total annual inventory cost will be calculated as:
C = (Q /2)(H) +(D/Q)(S)
where,
Q = 1170 pounds
H = holding cost = $12
D = annual demand = 65,700
S =set up cost = $125
Therefore, the minimum total annual inventory cost will be:
C = (Q /2)(H) +(D/Q)(S)
C = {(1170) /2] × 12} + {(65,700 /1170) × 125}
= 7020 +7019
= 14,039
Therefore, the minimum total annual inventory cost is $14,039.
Investing $2,000,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 3.0% in this and in all future rounds. Looking at the Round 0 Inquirer for Andrews, last year's sales were $163,189,230. Assuming similar sales next year, the 3.0% increase in demand will provide $4,895,677 of additional revenue. With the overall contribution margin of 34.1%, after direct costs this revenue will add $1,669,426 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $2,000,000 TQM investment, rounded to the nearest
Answer:
the payback period is 14 months
Explanation:
The computation of the payback period is shown below:
Profit is
= $2,000,000 - $1,669,426
= $330,574
Now payback period is
= 1 + $330,574 ÷ $1,669,426
= 1 +0.198 years
= 1.198 years
= 14.37 months
= 14 months
Hence, the payback period is 14 months
XYZ Company provides the following activity-based costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $160,000 3,200,000 lines Account verification costs $138,600 60,000 accounts Correspondence letters $19,200 4,000 letters Total costs $637,800 The above activities are used by Product A and B as follows: Product A Product B Account inquiry hours 2,700 hours 1,800 hours Account billing lines 820,000 lines 630,000 lines Account verification accounts 23,000 accounts 24,000 accounts Correspondence letters 1,500 letters 2,000 letters How much of the account verification costs will be assigned to Product B
Answer:
XYZ Company
Account verification costs assigned to Product B are:
= $55,400.
Explanation:
a) Data and Calculations:
Activities Total Costs Activity-cost drivers Activity Rates
Account inquiry $320,000 16,000 hours $20 per hour
Account billing $160,000 3,200,000 lines $0.05 per line
Account verification costs $138,600 60,000 accounts $2.31 per account
Correspondence letters $19,200 4,000 letters $4.80 per letter
Total costs $637,800
Usage by Products
Product A Product B
Account inquiry hours 2,700 hours 1,800 hours
Account billing lines 820,000 lines 630,000 lines
Account verification 23,000 accounts 24,000 accounts
Correspondence letters 1,500 letters 2,000 letters
Costs assigned to Product B
Account inquiry $36,000 (1,800 * $20)
Account billing $31,500 (630,000 * $0.05)
Account verification $55,400 (24,000 * $2.31)
Correspondence letters $9,600 (2,000 * $4.80)
Total costs assigned $132,500
Select the market segment that looks the most promising?
1. Luxury trenfollowers
Segment size 5,000(5%)
Growth rate 7%
2. School children
Segment size 35,000 (35%)
Growth rate 1%
3. University students
Segment size 24,099(24%)
Growth rate 5%
4. Outdoor enthusiasts
Segment size 14,000 (14%)
Growth rate 5%
5. Urban commuters
Segment size 20,000 (20%)
Growth rate 3%
Answer:
Luxury Trend followers
Explanation:
The consider which market segment shows the most or higest level of promise, we may have to the growth rate of each segment, which is the percentage change in earnings or revenue over a specific period of time. From the data given, the market segment with the greatest growth rate is the trend followers segment with a growth rate of 7%
Luxury trend followers : 7%
School children : 1%
University students : 5%
Outdoor enthusiasts : 5%
Urban Commuters : 3%
MC Qu. 147 Luker Corporation uses a process... Luker Corporation uses a process costing system. The company had $165,500 of beginning Finished Goods Inventory on October 1. It transferred in $842,000 of units completed during the period. The ending Finished Goods Inventory balance on October 31 was $163,200. The entry to account for the cost of goods manufactured during October is:
Answer:
Debit cost of goods sold $844,300
Credit finished goods inventory $844,300
Explanation:
Based on the information given The Appropriate journal entry to account for the cost of goods manufactured during October is:
Debit cost of goods sold $844,300
Credit finished goods inventory $844,300
($165,500 + $842,000 - $163,200 = $844,300)
(To record cost of goods manufactured)
odson Company manufactures a product with a standard direct labor cost of 2.3 hours of labor per unit at $10.60 per hour. Last month, 170 units were produced using 90 hours at $11.60 per hour. What was the company's labor quantity variance
Answer:
Direct labor time (efficiency) variance= $3,190.6 favorable
Explanation:
To calculate the direct labor quantity variance, we need to use the following formula:
Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate
Direct labor time (efficiency) variance= (391 - 90)*10.6
Direct labor time (efficiency) variance= $3,190.6 favorable
Standard quantity= 2.3*170= 391
The country of Bolivia had a Gross Domestic Product of $79 billion in 2016 and a population of 11 million people, the GDP per capita would be ________.
Answer:
The GDP per capita of country of Bolivia would be $7,181.82.
Explanation:
GDP Per capita refers to a measure that calculates a country's economic output per person by dividing its GDP by its population.
Therefore, we have:
GDP per capita = GDP / Population = $79 billion / 11 million = $79,000,000,000 / $11,000,000 = $7,181.82
Therefore, the GDP per capita of country of Bolivia would be $7,181.82.
Good afternoon. Kindly assist on the following please. Assignment due by 4:30pm Mike bookshop had the following structure. Share capital 500000 ordinary shares of $1 each. 300000 10% preference of $1 each. Reserves Share premium 200 000 General reserves 100 000 Retained earnings 400 000 8% debenture 100 000 During the year the following transaction took place. 01 January issue of 200 000 $1 ordinary shares at$1,20 and 100 000 preference shares at $2 each. 01 June a 1 for 4 right issue at a premium of $0,10c each per share. 01 December 1 for 5 bonus shares fully paid. All shares issued during the year qualified for bonus and the company wishes to leave the reserves in their flexible form. Required. Balance sheet extract.
Answer:
Mike Bookshop
Balance Sheet Extract as at December 31
Share capital:
1,050,000 ordinary shares of $1 each $1,050,000
400,000 10% preference of $1 each 400,000
Total share capital $1,450,000
Reserves:
Share premium 357,500
General reserves 100,000
Retained earnings 225,000
Total reserves $682,500
8% debenture $100,000
Explanation:
a) Data and Analysis:
Share capital:
500000 ordinary shares of $1 each.
300000 10% preference of $1 each.
Reserves:
Share premium 200 000
General reserves 100 000
Retained earnings 400 000
8% debenture 100 000
During the year the following transaction took place.
01 January Cash $240,000 Ordinary share capital $200 000 Share Premium $40,000
$1 ordinary shares at$1.20 and
01 January Cash $200,000 Preferred share capital $100 000 Share Premium $100,000
01 June Cash $192,500 Ordinary share capital $175,000 Share Premium $17,500
a 1 for 4 right issue at a premium of $0.10c each per share.
01 December Retained Earnings $175,000 Ordinary share capital $175,000
1 for 5 bonus shares fully paid.
Ordinary share capital:
Beginning balance $500,000
January 1 issue 200,000
June 1 rights issue 175,000
Dec. 1 bonus issue 175,000
Ending balance $1,050,000
Preferred share capital:
Beginning balance $300,000
January 1 issue 100,000
Ending balance $400,000
Share Premium:
Beginning balance $200,000
January 1 issues 140,000
June 1 rights issue 17,500
Ending balance $357,500
General reserves $100,000
Retained Earnings:
Beginning balance $400,000
Dec. 1 Bonus issue (175,000)
Ending balance $225,000
Valley Technology Balance Sheet As of January 24, 2021 (amounts in thousands)
Cash 9,700 Accounts Payable 1,500
Accounts Receivable 4,500 Debt 2,900
Inventory 3,800 Other Liabilities 800
Property Plant & Equipment 16,400 Total Liabilities 5,200
Other Assets 1,700 Paid-In Capital 7,300
Retained Earnings 23,600
Total Equity 30,900
Total Assets 36,100 Total Liabilities & Equity 36,100
Record the transactions in a journal, transfer the journal entries to T-accounts, compute closing amounts for the T-accounts, and construct a balance sheet to answer the question.
Jan 25. Sell product for $30,000 in cash with historical cost of $24,000
Jan 26. Sell, deliver, and receive payment of $40,000 for service
Jan 27. Consume good or service and pay expense of $2,000
What is the final amount in Total Liabilities & Equity?
Answer:
Valley Technology
1. Journal Entries:
Jan 25. Debit Cash $30,000
Credit Sales Revenue $30,000
To record the sale of goods for cash.
Debit Cost of goods sold $24,000
Credit Inventory $24,000
To record the cost of goods sold.
Jan 26. Debit Cash $40,000
Credit Service Revenue $40,000
To record the rendering of services for cash.
Jan 27. Debit Expenses $2,000
Credit Cash $2,000
To record the payment for good or service consumed.
2. T-accounts:
Cash
Date Account Titles Debit Credit
Jan. 24 Beginning balance 9,700
Jan 25. Sales Revenue 30
Jan 26. Service Revenue 40
Jan 27. Expenses 2
Jan. 31 Ending balance 9,768
Inventory
Date Account Titles Debit Credit
Beginning balance 3,800
Cost of goods sold 24
Ending balance 3,776
Sales Revenue
Date Account Titles Debit Credit
Cash $30
Service Revenue
Date Account Titles Debit Credit
Cash $40
Cost of goods sold
Date Account Titles Debit Credit
Inventory $24
Expenses
Date Account Titles Debit Credit
Cash $2
3. Balance Sheet As of January 31, 2021 (amounts in thousands)
Cash 9,768 Accounts Payable 1,500
Accounts Receivable 4,500 Debt 2,900
Inventory 3,776 Other Liabilities 800
Property Plant & Equipment 16,400 Total Liabilities 5,200
Other Assets 1,700 Paid-In Capital 7,300
Retained Earnings 23,644
Total Equity 30,944
Total Assets 36,144 Total Liabilities & Equity 36,144
4. The final amount in Total liabilities and equity is:
= $36,144
Explanation:
a) Data and Calculations:
Balance Sheet As of January 24, 2021 (amounts in thousands)
Cash 9,700 Accounts Payable 1,500
Accounts Receivable 4,500 Debt 2,900
Inventory 3,800 Other Liabilities 800
Property Plant & Equipment 16,400 Total Liabilities 5,200
Other Assets 1,700 Paid-In Capital 7,300
Retained Earnings 23,600
Total Equity 30,900
Total Assets 36,100 Total Liabilities & Equity 36,100
Analysis:
Jan 25. Cash $30,000 Sales Revenue $30,000
Cost of goods sold $24,000 Inventory $24,000
Jan 26. Cash $40,000 Service Revenue $40,000
Jan 27. Expenses $2,000 Cash $2,000
Revenue:
Sales revenue $30
Cost of goods sold (24)
Service revenue 40
Gross profit $46
Expenses 2
Net income $44
Retained Earnings, beginning $23,600
Net income 44
Retained Earnings,, ending $23,644
On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $4,500,000. The bonds pay interest semiannually. The market rate of interest is 8.0% and the bond selling price was $4,194,222. The bond issuance should be recorded as:
Answer: Debit Cash $4,194,222; Debit Discount on bonds payable $305,778; Credit Bonds payable $4,500,000
Explanation:
Based on the information given in the question, the journal entry will be prepared as follows:
Debit Cash $4,194,222
Debit Discount on bonds payable $305,778
Credit Bonds payable $4,500,000
Note that the discount on Bonds Payable was calculated as:
= $4,500,000 - $4,194,222
= $305,778
For March, sales revenue is $1,000,000, sales commissions are 5% of sales, the sales manager's salary is $80,000, advertising expenses are $65,000, shipping expenses total 1% of sales, and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are
Answer:
$217,100
Explanation:
total selling expenses = sales commission + sales manager's salary + shipping expense + advertising expenses + miscellaneous selling expenses
sales commissions = 50,000
advertising expenses = 65,000
shipping expenses = 10,000
sales manager's salary= 80,000
miscellaneous selling expenses = 10,000 + 2100
"Rogue Corp. has sales of $4,250,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm's interest expense is $250,000, and the corporate tax rate is 40%. What is Rogue's tax liability"
Answer:
$360,000
Explanation:
Calculation to determine Rogue's tax liability
Step 1 is to calculate the gross profit
Using this formula
Gross profit=Sales - Cost of Goods Sold
Let plug in the formula
Gross profit=$4,250,000-$2,500,000
Gross profit=$1,750,000
Step 2 is to calculate operating income
Using this formula
Operating income=Gross Profit -Total operating expenses
Let plug in the formula
Operating income=$1,750,000-$600,000
Operating income=$1,150,000
Step 3 is to calculate the EBT
Using this formula
EBT=Operating income - Interest expense
Let plug in the formula
EBT=$1,150,000-$250,000
EBT=$900,000
Now let calculate the Tax liability
Using this formula
Tax liability=EBT x Corp Tax
Let plug in the formula
Tax liability=$900,000*$40%
Tax Liability=$360,000
Therefore Rogue's tax liability is $360,000
How many BTU's are in a ton
Answer:
12.000
Explanation:
Because 1 ton equals 12,000 BTU.
For example, 48,000 BTU equals 4 tons, and 60,000 BTU equals 5 tons.
The two most important goals for government policy involve a trade-off between __________ and __________. A. big government; small government. B. taxation; government spending. C. direct regulation; indirect regulation. D. equity; efficiency.
Answer:
D
Explanation:
The real interest rate is Group of answer choices the percentage increase in money that the lender receives on a loan. the percentage increase in purchasing power that the lender receives on a loan. also called the after-tax interest rate. usually higher than the nominal interest rate.
Answer:
he percentage increase in purchasing power that the lender receives on a loan.
Explanation:
Interest rate is the rate earned on deposits or the rate charged on loans.
Interest rate could be real or nominal
Nominal interest rate is real interest rate plus inflation rate
Real interest rate is interest rate that has been adjusted for inflation
The higher the real interest rate, the higher the increase in purchasing power of the lender
Inflation is a persistent rise in the general price levels
Types of inflation
1. demand pull inflation – this occurs when demand exceeds supply. When demand exceeds supply, prices rise
2. cost push inflation – this occurs when the cost of production increases. This leads to a reduction in supply. Higher prices are the resultant effect
If the ABC Company has three lots of products for sale, purchase 1 (earliest) for $20, purchase 2 (middle) for $15 and purchase 3 (latest) for $25, which cost would be assumed to be sold first using FIFO costing
Answer:
Results are below.
Explanation:
Giving the following information:
Purchase 1 (earliest) for $20
Purchase 2 (middle) for $15
Purchase 3 (latest) for $25
The FIFO (first-in, first-out) method, allocates costs to the cost of goods sold using the purchase price of the firsts units incorporated into inventory. On the contrary, the ending inventory cost is calculated with the costs of the lasts units incorporated.
Assume that the company sells the number of units equivalent to the first lot. Then, the cost of goods sold will be $20; and the ending inventory $40 (15+25).
Bialy Company had the following information: Total sales $120,000 Total variable cost 48,000 Operating income 12,000 What is the breakeven sales revenue
Answer:
$100,000
Explanation:
The breakeven sales revenue is the annual fixed cost divided by the contribution margin ratio of the product, which is the amount of sales revenue that the Bialy company needs to achieve in order to make a zero profit.
operating income=sales revenue-variable cost-fixed cost
operating income=$12,000
sales revenue=$120,0000
variable cost=$48,000
fixed cost=unknown
$12,000=$120,000-$48,000-fixed cost
fixed cost=$120,000-$48,000-$12,000
fixed cost=$60,000
total contribution=sales revenue-variable cost
total contribution=$120,000-$48,000
total contribution=$72,000
contribution margin ratio=total contribution margin/sales revenue
contribution margin ratio=$72,000/$120,000
contribution margin ratio=60%
breakeven sales revenue=$60,000/60%
breakeven sales revenue=$100,000
On whom the trade bill drawn ?
The bill of exchange is drawn by the seller of the goods and is accepted by the buyer.
Firm A has a 21 percent marginal tax rate, and Firm Z has a 28 percent marginal tax rate. Firm A owns a controlling interest in Firm Z. The owners of Firm A decide to incur a $9,500 deductible expense that will benefit both firms.
Required:
Compute the after-tax cost of the expense assuming that:
a. Firm A incurs the expense
b. Firm Z incurs the expense
Answer:
a. $7,505
b.$6,840
Explanation:
a. Computation for the after-tax cost of the expense assuming that Firm A incurs the expense
Using this formula
After-tax cost = Deductible Expense - (Firm A Marginal tax rate* Deductible Expense)
Let plug in the formula
After-tax cost = ($9,500 - ($21%*9500)
After-tax cost = ($9,500 - $1,995)
After-tax cost=$7,505
Therefore the after-tax cost of the expense assuming that Firm A incurs the expense is $7,505
B. Computation for the after-tax cost of the expense assuming that Firm Z incurs the expense
Using this formula
After-tax cost = Deductible Expense - (Firm Z Marginal tax rate*Deductible Expense)
Let plug in the formula
After-tax cost =$9,500 -(28%*$9500)
After-tax cost =($9,500 - $2,660 )
After-tax cost=$6,840
Therefore the after-tax cost of the expense assuming that Firm Z incurs the expense is $6,840
One of your friends has opened a new wholesale electronics business and wants your help figuring out some inventory issues they are facing.
One night last week, there seemed to be fewer HD televisions in the warehouse than they expected. The last time they were in the warehouse was
a week earlier, and they hadn't noticed anything amiss.
As they looked around, they saw that the evening warehouse worker was filling the last orders of the day. The delivery driver and day warehouse
worker were gone for the day, and the delivery van keys were on the desk that the warehouse workers shared. The doors to the loading dock were
open, as was the door to the office area where the accountant, two customer service specialists, and the owner worked.
Knowing that you are familiar with accounting principles, they asked for your help in figuring out how to prevent this in the future.
Answer:
Hence,
When control is missing the wrongdoings happen at a quick pace because the barrier in their work involves an end. there's no check on the operations and hence many wrongdoings happen without coming into the eyes of management. control helps within the analysis of wrongdoings by comparing with the standards and checks. Hence without control, it's hard to depict the extent of wrongdoings within the organization.
Explanation:
Role of control
Internal controls are policies and procedures put in situ by management to make sure that, among other things, the company’s financial statements are reliable. Some internal controls relevant to an audit include bank reconciliations, password control systems for accounting software, and inventory observations.
Internal controls provide reasonable assurance about achieving objectives regarding:
.Effectiveness and efficiency of operations
.Reliability of financial reporting
.Safeguarding of assets
.Compliance with applicable laws and regulations
Selected accounts with a credit amount omitted are as follows: Work in Process Apr. 1 Balance 7,500 Apr. 30 Goods finished X 30 Direct materials 60,000 30 Direct labor 191,000 30 Factory overhead 57,300 Finished Goods Apr. 1 Balance 13,500 30 Goods finished 307,300 What was the balance of Work in Process as of April 30? a.$307,300 b.$13,500 c.$57,300 d.$8,500
Answer:
the balance in work in process in april 30 is $8,200
Explanation:
The computation of the balance in work in process in april 30 is as follows:
Balance of Work in Process as of April 30 is
= Apr 1 Balance + Direct material + direct labor + overhead - goods finished
= $7,500 + $60,000 + $191,000 + $57,000 - $307,300
= $8,200
Hence, the balance in work in process in april 30 is $8,200
This is the answer but the same is not provided in the given options
Suppose you invest $210,000 in an annuity that returns 6 annual payments, with the first payment one year from now and each subsequent payment growing by 5%. At an interest rate of 8%, how much is the first annual payment you receive?
Answer:
$40,510.82
Explanation:
Present value = $210,000
Number of annual payments (n) = 6
Growth rate (g) = 5% or 0.05
Interest rate (r) = 8% or 0.08
Amount of first annual payment = [Present value * (r - g)] / [1 - {(1 + g)/(1 + r)}^n]
Amount of first annual payment = [210,000 * (0.08-0.05)] / [1 - [(1+0.05) / (1+0.08)]^6]
Amount of first annual payment = [210,000*0.03] / [1 - (0.972222)^6]
Amount of first annual payment = 6,300 / [1 - 0.844486]
Amount of first annual payment = 6,300 / 0.155514
Amount of first annual payment = 40510.82217678151
Amount of first annual payment = $40,510.82
So, the amount of the first annual payment you will receive is $40,510.82.
Chicotti Company has 6,000 units in beginning work in process, 30% complete as to conversion costs, 75,000 units transferred out to finished goods, and 2,000 units in ending work in process 20% complete as to conversion costs. The beginning and ending inventory is fully complete as to materials costs. How much are equivalent units for materials if the FIFO method is used
Answer:
71,000
Explanation:
Calculation to determine How much are equivalent units for materials if the FIFO method is used
Using this formula
Equivalent units for materials=(Units transferred out to Finished goods + Units in ending work in process – Units in beginning work in process)
Let plug in the formula
Equivalent units for materials=75,000 + 2,000 – 6,000
Equivalent units for materials= 71,000
Therefore the equivalent units for materials if the FIFO method is used will be 71,000
Job-Order Costing versus Process Costing Required: Identify each of the following types of businesses as either job-order or process costing. a. Hospital services b. Custom cabinet making c. Toy manufacturing d. Soft-drink bottling e. Airplane manufacturing (e.g., 767s) f. Personal computer assembly g. Furniture making (e.g., computer desks sold at discount stores) h. Custom furniture making i. Dental services j. Paper manufacturing k. Nut and bolt manufacturing l. Auto repair m. Architectural services n. Landscape design services o. Flashlight manufacturing
Answer:
Job-Order Costing versus Process Costing
Types of businesses using job order costing:
a. Hospital services
b. Custom cabinet making
e. Airplane manufacturing (e.g., 767s)
h. Custom furniture making
i. Dental services
l. Auto repair
m. Architectural services
n. Landscape design services
Types of businesses using processing costing:
c. Toy manufacturing
d. Soft-drink bottling
f. Personal computer assembly
g. Furniture making (e.g., computer desks sold at discount stores)
j. Paper manufacturing
k. Nut and bolt manufacturing
o. Flashlight manufacturing
Explanation:
In job order costing, the manufacturer tracks its prime costs to individual products or jobs. This means that the costs of each job can be computed separately because costs are traced to each job. Under process costing, the prime costs are tracked to the department, process or batch, and not to individual products or jobs.
The current asset section of the Excalibur Tire Company’s balance sheet consists of cash, marketable securities, accounts receivable, and inventory. The December 31, 2021, balance sheet revealed the following:
Inventories $840,000
Total assets $2,800,000
Current ratio 2.25
Acid-test ratio 1.2
Debt to equity ratio 1.8
Determine the following 2021 balance sheet items:
a. Current assets
b. Shareholders' equity
c. Noncurrent assets
d. Long-term liabilities
Answer:
a. Current assets = $1,800,000
b. Shareholders' equity = $1,000,000
c. Noncurrent assets = $1,000,000
d. Long-term liabilities = $1,000,000
Explanation:
a. Current assets
Current liabilities = Inventories / (Current ratio - Acid-test ratio) = $840,000 / (2.25 - 1.2) = $800,000
Since Current assets / Current liabilities = 2.25 = Current ratio, therefore, we have:
Current assets = Current ratio * Current liabilities = 2.25 * $800,000 = $1,800,000
b. Shareholders' equity
Debt to equity ratio = Total liabilities / Shareholders' equity = 1.8
Total liabilities = (1.8 * Shareholders' equity)
Total assets = $2,800,000
Total assets = Total liabilities + Shareholders' equity ………….. (1)
Substituting all the relevant values into equation (1) and solve for Shareholders' equity, we have:
$2,800,000 = (1.8 * Shareholders' equity) + Shareholders' equity
$2,800,000 = (1.8 + 1) * Shareholders' equity
$2,800,000 = 2.8 * Shareholders' equity
Shareholders' equity = $2,800,000 / 2.8 = $1,000,000
c. Noncurrent assets
Noncurrent assets = Total assets - Current assets = $2,800,000 - $1,800,000 = $1,000,000
d. Long-term liabilities
Long-term liabilities = Total assets - Current liabilities - Shareholders' equity = $2,800,000 - $800,000 - $1,000,000 = $1,000,000
2018
Feb. 2 Recorded credit sales of $97,000. Ignore Cost of Goods Sold.
Nov. 1 Loaned $18,000 to Jess Price, an executive with the company, on a one-year, 7% note.
Dec. 31 Accrued interest revenue on the Price note. 2019
Nov. 1 Collected the maturity value of the Price note.
Required:
Journalize the entries.
Answer:
Feb 6
Dr Account receivable $97,000
Cr Sales revenue $97,000
Jul 1
Dr Notes receivable $18,000
Cr Cash $18,000
Dec 31
Dr Interest receivable $630
Cr Interest revenue $630
July 1
Dr Cash $19,260
Cr Notes receivable $18,000
Cr Interest receivable $630
Cr Interest revenue $630
(To record collection)
Explanation:
Preparation of the journal entries
Feb 6
Dr Account receivable $97,000
Cr Sales revenue $97,000
(To credit sales)
Jul 1
Dr Notes receivable $18,000
Cr Cash $18,000
(To record loan given)
Dec 31
Dr Interest receivable ($18000*7%*6/12) $630
Cr Interest revenue $630
(To record accrued interest)
July 1
Dr Cash $19,260
($18,000+$630+630)
Cr Notes receivable $18,000
Cr Interest receivable $630
Cr Interest revenue $630
(To record collection)
If a company spends $80 million to build facility space sufficient to hold 5 million pairs of footwear-making equipment at a site in Latin America, then the company's annual depreciation costs for this facility space will be
Answer: $8,000,000
Explanation:
From the question given, the cost of the building facility is $80 million. Also, it should be noted that the default rate for depreciation is given as 10%, therefore, the company's annual depreciation costs for this facility space will be:
= Depreciation rate × Cost of building
= 10% × $80,000,000
= 0.1 × $80,000,000
= $8,000,000
Oceanic, a venture capital firm, has the opportunity to invest in one of two firms that are in the process of globalizing. Macmillan, an air-conditioner manufacturer, faces intense pressure from its home market. Rent a Swag, a dog-toy manufacturer, has encountered little competition in its country of origin. In which company should Oceanic invest?
a. Macmillan, because air conditioners cost more to ship than dog toys do
b. Macmillan, because firms that face stiff competition at home tend to do better abroad
c. Rent a Swag, because firms that face little or no competition at home tend to do better abroad
d. Rent a Swag, because dog toys cost less to ship than air conditioners do
Answer: B. Macmillan, because firms that face stiff competition at home tend to do better abroad
Explanation:
Following the information given, it can be deduced that Oceanic should invest in Macmillan, because firms that face stiff competition at home tend to do better abroad.
The fact that Macmillan, which is an air-conditioner manufacturer, faces intense pressure from its home market will have resulted in the company making quality sure conditioners in order to sustain the pressure and have an edge over its local competitors. Therefore, the company will do better abroad as a result of this.
The correct option is B.
