Question
TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 1.50 per pound $12.00
Direct Labor 0.25 6.20 per hour $1.55
13.55
During November, TaskMaster purchased 184,000 pounds of direct materials at a total cost of $331,200. The total factory wages for November were $38,000, 90% of which were for direct labor. TaskMaster manufactured 22,000 units of product during November using 162,000 pounds of direct materials and 6,000 direct labor hours. What is the direct materials efficiency variance for November
Answer:
Efficiency Variance $21,000 favorable
Explanation:
Direct material efficiency( usage variance) occurs when the actual quantity used used to achieve a given output is more or less than the standard quantity allowed to achieve same.
It will be computed as follows:
Pounds
22,000 units should have used (22,000 × 8) 176,000
but did use (actual quantity) 162,000
Efficiency variance (in pounds) 14000 favorable
Standard price × $1.50
Efficiency Variance $21,000 favorable
Winsor Clothing Store had a balance in the Accounts Receivable account of $760,000 at the beginning of the year and a balance of $840,000 at the end of the year. Net credit sales during the year amounted to $7,200,000. The average collection period of the accounts receivable in terms of days was
A) 30 days.
B) 365 days.
C) 45.1 days.
D) 42.9 days.
Answer:
The correct answer is 40.6 days. None of the options is correct.
Explanation:
The average collection period of the accounts receivable is how long it takes the company to collect its accounts receivable. It is expressed as: (Average accounts receivable / Net credit sales) x 365 days.
Average collection period = [($760,000 + $840,000)/2 / $7,200,000] x 365 days = 40.6 days
This means it takes the company 40.6 days to collect its accounts receivable.
ABC Corporation makes a range of products. Management is considering a special order for 700 units of product J45 at $50 each. The normal selling price of product J45 is $75. The cost information is as follows: Direct materials ………………………………………….………….…….$17 per unit Direct labor ………………………………………………………………..$18 per unit Variable manufacturing overhead…………………………………………..$3 per unit Fixed manufacturing overhead……………………………………………..$13 per unit Variable selling and administrative expenses….………….………….…….$5 per unit Fixed selling and administrative expenses…..………………..……………..$12 per unit If the special order were accepted, normal sales of this and other products would not be affected. The company has ample excess capacity to produce the additional units. (a). If the special order were accepted, what would be the impact on the company's overall profit? Please show all calculations and label items clearly. (15 points)
Answer:
Effect n income= $4,900
Explanation:
Giving the following information:
Management is considering a special order for 700 units of product J45 at $50 each.
Direct materials= $17 per unit
Direct labor= $18 per unit
Variable manufacturing overhead= 3 per unit
Variable selling and administrative expenses= $5 per unit
Because it is a special offer and there is unused capacity, we will not take into account the fixed costs.
First, we determine the unitary variable cost:
Unitary varaible cost= 17 + 18 + 3 + 5= $43
Now, we can calculate the effect on income:
Effect n income= 700*(50 - 43)= $4,900
On January 10, 2022, Sweet Acacia Industries sold merchandise on account to Tompkins for $8,380, terms n/30. On February 9, Tompkins gave Sweet Acacia Industries a 7% promissory note in settlement of this account. Prepare the journal entry to record the sale and the settlement of the accounts receivable. (Omit cost of goods sold entries.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
The journal entry to record the sale of merchandise to Tompkins on account is: Account Receivable Dr $8,380, Sales Cr $8,380. When the account receivable is settled by a promissory note from Tompkins, the journal entry is: Notes Receivable Dr $8,380, Accounts Receivable Cr $8,380.
Explanation:The subject area of this question is related to accounting transactions and the creation of journal entries. Specifically, it pertains to the sale of goods on account and the settlement of this account receivable through a promissory note.
Let's work through this step by step:
The sale is recorded as follows:Remember, a promissory note is a financial instrument that contains a written promise by the issuer (Tompkins in this case) to pay a definite sum of money to the payee (Sweet Acacia Industries), either on demand or at a specified future date.
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The law creates the foundation for ethical behavior.
True
False
Answer:
True.
Explanation:
The law can be defined as the system of principles, regulations and rules established by legislature, that is adopted in a community, society or country to regulate the actions of its citizens, members or employees.
The law is a tool used by individuals, organizations, and even government to ensure everybody is well behaved, non-criminal and civil in their actions.
The law creates the foundation for ethical behavior.
In circumstances where there are aberration, the law is enforced as a punishment and penalty.
On January 2, 2021, David Corporation purchased a patent for $510,000. The remaining legal life is 10 years, but the company estimated that the patent will be useful only for six years. In January 2023, the company incurred legal fees of $60,000 in successfully defending a patent infringement suit. The successful defense did not change the company’s estimate of useful life. Required: Prepare journal entries related to the patent for 2021, 2022, and 2023. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
This answer provides the journal entries related to the patent for the David Corporation for the years 2021, 2022, and 2023, taking into account the initial purchase, annual amortization, and legal fees. The entries show the purchase of the patent, the amortization over its useful life, and the addition of legal fees after defending a successful patent infringement suit.
Explanation:Firstly, the patent is initially capitalized with the cost. For the year 2021, the cost of $510,000 would be recorded as a debit to Patent and a credit to Cash. David Corporation then amortizes the patent over its useful life. Since the company estimated the useful life as 6 years, the annual amortization expense would be $510,000 / 6, which equals $85,000. This would be recorded by a debit to Amortization Expense, and a credit to Accumulated Amortization. These entries will be repeated in 2022.
In 2023, time to handle the legal fees associated with the patent infringement suit. These costs are capitalized by debiting the Patent for $60,000 and crediting Cash. The amortization entry would also be recorded with a debit to Amortization Expense, and a credit to Accumulated Amortization.
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A company must decide between scrapping or reworking units that do not pass inspection. The company has 22,000 defective units that cost $6 per unit to manufacture. The units can be sold as is for $2.00 each, or they can be reworked for $4.50 each and then sold for the full price of $8.50 each. If the units are sold as is, the company will be able to build 22,000 replacement units at a cost of $6 each, and sell them at the full price of $8.50 each. What is the incremental income from selling the units as scrap and reworking and selling the units
Answer:
It is more profitable to sell the units as-is and produce new ones.
Explanation:
Giving the following information:
The company has 22,000 defective units that cost $6 per unit to manufacture.
Sell as-is:
Selling price= $2
Rework:
Additional cost= $4.5
Selling price= $8.5
If the units are sold as-is, the company will be able to build 22,000 replacement units for $6 each and sell them at the full price of $8.50 each.
The original cost of the 22,000 units is a sunk cost, it will remain no matter the decision.
Sell as-is:
Defective units= 22,000*3= 44,000
New units= 22,000*(8.5 - 6)= 55,000
Total income= $99,000
Rework:
Sales= 22,000*(8.5 - 4.5)= $88,000
It is more profitable to sell the units as-is and produce new ones.
Prepare adjusting journal entries, as needed, for the following items. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) The Supplies account shows a balance of $510, but a count of supplies reveals only $300 on hand at year-end. The company initially records the payments of all insurance premiums as prepaid insurance. The unadjusted trial balance at year-end shows a balance of $580 in Prepaid Insurance. A review of insurance policies reveals that $150 of insurance is unexpired. Employees work Monday through Friday, and salaries of $2,900 per week are paid each Friday. The company's year-end falls on Tuesday. At year-end, the company received a utility bill for December's electricity usage of $300 that will be paid in early January.
Answer and Explanation:
The adjusting entries are shown below:
1. Supplies expense $210 ($510 - $300)
To Supplies $210
(Being the supplies expense is recorded)
For recording this we debited the supplies expense as it increased the expense and credited the supplies as it reduced the assets
2. Insurance expense Dr $150
To Prepaid insurance $150
(Being the insurance expense is recorded)
For recording this we debited the insurance expense as it increased the expense and credited the prepaid insurance as it reduced the assets
3. Salaries expense Dr $1,160 ($2,900 × 2 days ÷ 5 days)
To Salaries payable $1,160
(Being the salaries expense is recorded)
For recording this we debited the salaries expense as it increased the expense and credited the salaries payable as it increased the liabilities
4. Electricity expense Dr $300
To Expense payable $300
(Being the electricity expense is recorded)
For recording this we debited the electricity expense as it increased the expense and credited the expense payable as it increased the liabilities
Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $7,900 of indirect materials and $13,200 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:
Job 301
direct material 10,900
Direct Labor 8,900
Factory Overhead 5785
Total 25,585
Job 302
Direct Material 18,300
Direct Labor 17,700
Factory Overhead 11,505
Total 47505
Job 303
Direct Materials 26,000
Direct Labor 16,000
Factory Overhead -
Job 304
Direct Material 13700
Direct Labor 12300
Factory Overhead -
Required:
Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles.
A. Direct and indirect materials used.
B. Direct and indirect labor used.
C. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).
D. Completion of Jobs 301 and 302.
Answer and Explanation:
The Journal entry is shown below:-
1. Work in progress Dr, $68,900
(10,900 + $18,300 + 26,000 + $13,700)
Factory overhead Dr, $7,900
To Material $76,800
(Being direct and indirect material used is recorded)
2. Work in progress Dr, $54,900
($8,900 + $17,700 + $16,000 + $12,300)
Factory overhead Dr, $13,200
To Wages payable $68,100
(Being direct and indirect labor used is recorded)
3. Work in progress Dr, $39,259
To Factory overhead $39,259
($54,900 × ($5,785 ÷ $8,090))
(Being factory over applied is recorded)
4. Finished goods Dr, $73,090
To Work in progress $73,090
($25,585 + $47,505)
(Being Completion of Job 301 and Job 302 is recorded)
Timberlake Company owns equipment with a cost of $165,000 and accumulated depreciation of $60,000 that can be sold for $82,000 less a 6% sales commission. Alternatively, Timberlake Company can lease the equipment to another company for five years for a total of $84,600, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Timberlake Company on the equipment would total $7,950 over the five years. Prepare a differential analysis on March 23 as to whether Timberlake Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Answer:
Income (loss) 77080 76650
Explanation:
Timberlake Company
Sell Lease
Revenue 82000 84600
Expense -4920 -7950
Income (loss) 77080 76650
Therefore Company should sell the equipment
6%×82,000 =4920
Answer:
Timberlake Company
Differential Analysis on March 23:
a) Lease (Alternative 1):
Revenue = $84,600
Expenses = -$7,950
Income = $76,650
b) Sell (Alternative 2):
Revenue = $82,000
6% Sales Commission = -$4,920
Income = $77,080
Explanation:
Alternative 2 looks more attractive than alternative 1. It will bring in a net income of $77,080 as opposed to alternative 1's .$76,650.
Moreso, alternative 2's cash inflow is immediate while alternative 1's cash inflow will come over a 5-year period. When discounted, the cash inflow will be far less than Alternative 2's cash inflow.
It is true that both alternatives will cause the company to lose on the book value of the equipment. But the cost of the equipment is a sunk cost, which is not relevant in making a differential analysis type of decision.
In differential analysis, only relevant costs are considered.
Park Co. is considering an investment that requires immediate payment of $27,000 and provides expected cash inflows of $9,000 annually for four years. Assume Park Co. requires a 10% return on its investments. 1-a. What is the internal rate of return? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your present value factor to 4 decimals.) 1-b. Based on its internal rate of return, should Park Co. make the investment?
Answer:
IRR is 12.59%
IRR of 12.59% is greater than the required return on the investment of 10%,as a result the project should be accepted
Explanation:
The internal rate of return is the rate where present value of cash inflows from a project equal the initial capital investment in the project,hence it could be termed the break-even project rate of return.
Using the IRR(Internal Rate of Return) formula in excel which is given below,one can compute the project IRR
=IRR(values)
The values are the relevant cash flows consisting of initial cash outflow as well as the subsequent years cash inflows as shown in the attached.
IRR=12.59%
Many manufacturing workers (such as factories in China and Russia) and service industry workers (such as call centers and help desks in India) complete their job functions in a different culture and environment than the company's headquarters. If you were an operations manager in the United States overseeing an international operation, what issues should you be aware of? How would you prepare yourself to manage different cultures?
Answer:
Part A: Here are the problems and features people work culture that I might ought to acquire to be ready to manage procedures:
Casual mode of statement within the hierarchy: To run processes in United States of America it's vital to know that we tend to report the manager, colleague, director, executive, chief executive officer together with his/her name and not as Sir/Madam or Boss. It’s vital to possess self-esteem and concentrate on work notwithstanding the hierarchy outlined. The philosophy of normal conferences: the United States of America follows a philosophy of consistent team meetings regardless of the schedule. The work philosophy strains people/ groups get along and set up the processes. The conferences don't seem to be essentially needed to possess thoughtful or main areas establishment agenda. Decision making concerning direct & authentic method: within the United States of America someone is revered for his straight feedback and authentic written report. the workers say specifically what the cruel and unknown evidences are gift throughout conferences. Admiration for promptness is high within the United States of America & they conjointly set up the months well earlier. it's vital to set up the calendar and add a scientific manner.
Part B: Here are sure things i might do to organize myself for dealing totally different cultures:
Embrace variety and find to understand every and each employee: Diversity brings with itself nice practices, sections and skills. it's vital to know every and each worker in relations of skills, voyage and private goals. It supports to achieve the group well. Clear assembly and precise announcement procedures facilitate to accomplish the society team in a very winning manner. I will outline norms, method flow and guarantee they're having endurance because it supports to guide various culture groups. Since they are available from totally different experiences it helps to avoid misconception and generates a transparent flow of consecutively on a daily basis to day processes. Monitoring of the workers is crucial to form certain that team isn't facing any work-culture problems. As a front-runner, i would like to remember of the role & accountability of every worker and make sure that I offer an surroundings of knowledge & development.
A founder is thinking about retiring and has no children who are interested in taking over the family business, an agricultural products manufacturer with about 100 employees. The business is stable, profitable, and growing at a moderate rate. A team of managers has been assembled who are capable of running the business without the founder’s involvement and employee turnover is low. Which of the following "harvesting strategies" would give the founder a way to fund their retirement while also providing an incentive for managers and employees to continue to grow the business?A. Sell the businessB. Undertake an IPOC. Establish an ESOPD. All of the listed options are equal in their ability to accomplish the founder’s objective
Answer:
All the listed options are equal in their ability to accomplish the founder's objective.
Explanation:
The founder of the organisation has attained the age of retirement and has no children to continue with the management of the organisation, therefore a harvest strategy has to be carried out inorder to get value out of the business.
Harvesting strategy can be described as the discontinuation or reduction of the production of a particular product, it is carried out by entrepreneurs when they wish to exit a business. This strategy is carried out to extract the maximum amount of profit from the sales of the product in the market.
O’Connor Company ordered a machine on January 1 at a purchase price of $100,000.
On the date of delivery, January 2, the company paid $25,000 on the machine and signed a long-term note payable for the balance.
On January 3, it paid $1,000 for freight on the machine.
On January 5, O’Connor paid cash for installation costs relating to the machine amounting to $6,000.
On December 31 (the end of the accounting period), O’Connor recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $10,700.
Required:
1. Indicate the effects (accounts, amounts, and for increase or decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. (Enter any decreases to account balances with a minus sign.)
Answer and Explanation:
The effect of each transaction is shown below:-
Accounting equation
Assets = Liabilities (+) Equity
1 Jan No effect No effect No effect
2 Jan Cash -$25,000 Notes payable $75,000
Machine +$100,000
3 Jan Cash -$1,000
Machine +$1,000
5 Jan Cash -$6,000
Machine +$6,000
Here, + sign indicates the increase in amount and - sign indicated the decrease in amount.
The transactions affect the company's balance sheet by changing the value of different asset and liability accounts. They primarily include changes in Cash, Machinery, Notes Payable, and Accumulated Depreciation.
Explanation:The subject of this question is accounting equation which relates to O’Connor Company's different transactions from January 1 to January 5 and the depreciation that occurred on December 31. The accounting equation is Assets = Liabilities + Equity.
On January 1, the company ordered a machine for $100,000. No transaction occurs at this point as no payment has been made or received. On January 2, the company paid $25,000 and signed a long-term note for the balance $75,000. This would decrease Cash (an asset) by $25,000 and increase Machinery (an asset) by $100,000 and Notes Payable (a liability) by $75,000. On January 3, it paid $1,000 for freight which increases the Machinery (asset) by $1,000 and decreases Cash (asset) by $1,000. On January 5, it paid $6,000 for installation costs, increasing Machinery (asset) by $6,000 and decreasing Cash (asset) by $6,000. On December 31, the company recorded depreciation of (100,000+1,000+6,000-10,700)/10 = $9,630. This would decrease Machinery (asset) by $9,630 and increase Accumulated & Depreciation (contra-asset) by $9,630. Learn more about Accounting Equation here:
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Which one of the following is an example of the circular flow model and shows the interdependence of households and firms? a. The firms go to the resource market to supply resources that households demand and, in turn, provide households with the goods and services produced for the product markets. b. Households supply their resources to the firms in the factor markets and, in turn, demand in the product market the goods and services produced by the firms. c. The firms in the factor markets pay to households in the form of wages, interest, rent and profit⎯for resources demanded. d. Households demand their resources from the firms in the factor markets and, in turn, supply in the product market the goods and services produced by firms.
Answer:
B. household
Explanation:
I took the quiz
The correct answer is a. The firms go to the resource market to supply resources that households demand and, in turn, provide households with the goods and services produced for the product markets.
In the circular flow model, households and firms are interconnected through two main markets: the product market and the resource market. In option a, it illustrates the flow of resources and goods/services between households and firms.
Firms go to the resource market to obtain the resources (such as labor, capital, land) that households supply. In return, firms produce goods and services and supply them to households through the product market. This exchange demonstrates the interdependence of households providing resources and firms providing goods and services, creating a continuous flow of economic activity in the economy.
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When a bank reconciliation has been satisfactorily completed, the only related entries to be made in the depositor's records are: Multiple Choice To correct errors made by the bank in recording the dollar amounts of cash transactions during the period. To reconcile items that explain the difference between the balance per the books and the balance per the bank statement. To record outstanding checks and bank service charges. To record items that explain the difference between the balance per the accounting records and the adjusted cash balance.
Answer:
To record items that explain the difference between the balance per the accounting records and the adjusted cash balance.
Explanation:
A bank reconciliation mainly computed by an accountant, gives the difference between the balance in relation to the bank statement and the cash balance with respect to the accounting records of the depositor in a particular financial institution.
When a bank reconciliation has been satisfactorily completed, the only related entries to be made in the depositor's records are to record items that explain the difference between the balance per the accounting records and the adjusted cash balance.
The following information relates to next year's projected operating results of the Children's Division of Grunge Clothing Corporation: Contribution margin $ 200,000 Fixed expenses 500,000 Net operating loss $ (300,000 ) If the Children's Division is eliminated, $170,000 of the above fixed expenses could be avoided. The annual financial advantage (disadvantage) for the company of eliminating this division should be:
Answer:
The annual financial disadvantage of eliminating the division is $30,000.
Explanation:
contribution margin = revenue - variable costs = $200,000
fixed expenses = $500,000
net loss = $300,000.
If the division is eliminated, only $170,000 of the fixed expenses can be avoided, therefore the company's fixed expenses will remain at $330,000.
Therefore, eliminating the children's division will result in a $30,000 (= $330,000 - $300,000) decrease in net income.
On January 1, a company issues bonds dated January 1 with a par value of $370,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $384,280. The journal entry to record the issuance of the bond is: Multiple Choice Debit Cash $384,280; credit Discount on Bonds Payable $14,280; credit Bonds Payable $370,000. Debit Cash $384,280; credit Premium on Bonds Payable $14,280; credit Bonds Payable $370,000. Debit Cash $384,280; credit Bonds Payable $384,280. Debit Cash $370,000; debit Premium on Bonds Payable $14,280; credit Bonds Payable $384,280. Debit Bonds Payable $370,000; debit Bond Interest Expense $14,280; credit Cash $384,280.
Answer and Explanation:
The journal entry is shown below:
Cash Dr $370,000
Discount on bond payable Dr $14,280
To Bond payable $384,280
(Being the issuance of the bond is recorded)
For recording this we debited the cash as it increase the assets and credited the bond payable as it also increased the liabilities and the difference is debited to the discount on bond payable
This is the answer but the same is not given in the options
The correct journal entry for this scenario is Debit Cash for $384,280 due to the bonds being sold for that amount; Credit Premium on Bonds Payable for $14,280 as the bonds were sold at a premium; Credit Bonds Payable $370,000, the par value of the bonds. This maintains the balance as per the fundamental accounting equation.
Explanation:The correct multiple choice option for this question pertaining to the journal entry associated with the issuance of a bond on January 1 is: 'Debit Cash $384,280; credit Premium on Bonds Payable $14,280; credit Bonds Payable $370,000.'
The reason for this is because the bonds were sold for more than their par value ($384,280 versus $370,000). The excess, $14,280, is known as a premium and is credited to the 'Premium on Bonds Payable' ledger. Hence, the total credit in the entry equals the debit for the cash received , maintaining the balance in accounting.
In financial terms, a bond is like an 'I owe you' note that an investor receives in exchange for money. The bond has a face or par value, which is the amount the borrower agrees to pay back at maturity. However, bonds can be sold for more (a premium) or less (a discount) than their face value, depending on the market condition and contract rate.
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Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $33.35 per share, and it is expected to pay a dividend of $1.36 at the end of next year. Flotation costs will represent 3% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 25%. What will be the WACC for this project
Answer:
WACC = 12.9%
Explanation:
The cost of common stock can be determined using the dividend valuation model.
According to the dividend valuation, the value of a stock is the present value of expected future dividends discounted at the required rate of return.
The model can me modified to determined the cost of equity having flotation cost as follows:
Cost of equity = D(1+r )/P(1-f) + g
d- dividend, p- price of stock , f - flotation cost , - g- growth rate
Cost of common stock for Kuhn
D(1+r) =1.36 , g- 5%, P= 33.35, f-3% g-8.7%
Cost of common stock = 1.36/(33.35× (1-0.03)) + 0.087= 12.9%
WACC = 12.9%
Note the tax rate is not needed for this calculation
During November, the following summary transactions were completed. Nov. 8 Paid $3,195 for salaries due employees, of which $1,665 is for November and $1,530 is for October. 10 Received $1,710 cash from customers in payment of account. 11 Purchased merchandise on account from Dimas Discount Supply for $7,200, terms 2/10, n/30. 12 Sold merchandise on account for $4,950, terms 2/10, n/30. The cost of the merchandise sold was $3,600. 15 Received credit from Dimas Discount Supply for merchandise returned $270. 19 Received collections in full, less discounts, from customers billed on sales of $4,950 on November 12. 20 Paid Dimas Discount Supply in full, less discount. 22 Received $2,070 cash for services performed in November. 25 Purchased equipment on account $4,500. 27 Purchased supplies on account $1,530. 28 Paid creditors $2,700 of accounts payable due. 29 Paid November rent $337. 29 Paid salaries $1,170. 29 Performed services on account and billed customers $630 for those services. 29 Received $608 from customers for services to be performed in the future. (b) Journalize the November transactions.
Answer and Explanation:
The journal entries are shown below:
On Nov 8
Salary payable $1,530
Salary expense $1,665
To Cash $3,195
(Being the salary paid is recorded)
On Nov 10
Cash $1,710
To Account receivable $1,710
(being the amount received is recorded)
On Nov 11
Inventory $7,200
To Account payable $7,200
(being the purchase of merchandise on account is recorded)
On Nov 12
Account receivable $4,950
To Sales revenue $4,950
(being the sales is recorded)
Cost of goods sold $3,600
To Inventory $3,600
(Being the cost of goods sold is recorded)
On Nov 15
Account payable $270
To Inventory $270
(Being the purchase return is recorded)
On Nov 19
Cash ($4,950 × 98%) $4,851
Sales discount $99
To Account receivable $4,950
(Being the collection is recorded)
On Nov 20
Account payable ($7,200 - $270) $6,930
To Cash ($6,930 × 98%) $6,791.40
To Inventory $138.60
(being the amount paid is recorded)
On Nov 22
Cash $2,070
To Service revenue $2,070
(Being the service revenue is recorded)
On Nov 25
Equipment $4,500
To Account payable $4,500
(Being the purchase of equipment on account is recorded)
On Nov 27
Supplies $1,530
to Account payable $1,530
(Being purchase of supplies on account is recorded)
On Nov 28
Account payable $2,700
To Cash $2,700
(Being the amount paid is recorded)
On Nov 29
Rent expense $337
To Cash $337
(Being the rent paid is recorded)
On Nov 29
Salaries expense $1,170
To Cash $1,170
(Being salary paid is recorded)
On Nov 29
Account receivable $630
To Service revenue $630
(Being the service revenue is recorded)
On Nov 29
Cash $608
To Unearned revenue $608
(Being the advance payment is recorded)
The following transactions and adjusting entries were completed by Robinson Furniture Co. during a three-year period. All are related to the use of delivery equipment. The double-declining-balance method of depreciation is used.
Year 1
Jan. 8. Purchased a used delivery truck for $24,000, paying cash.
Mar. 7. Paid garage $900 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.
Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is four years, with a residual value of $4,000 for the truck.
Year 2
Jan. 9. Purchased a new truck for $50,000, paying cash.
Feb. 28. Paid garage $250 to tune the engine and make other minor repairs on the used truck.
Apr. 30. Sold the used truck for $9,500. (Record depreciation to date in Year 2 for the truck.)
Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $12,000 and an estimated life of eight years.
Year 3
Sept. 1. Purchased a new truck for $58,500, paying cash.
Sept. 4. Sold the truck purchased January 9, Year 2, for $36,000. (Record depreciation to date for Year 3 for the truck.)
Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $16,000 and an estimated useful life of 10 years.
Instructions:
Journalize the transactions and the adjusting entries.
Answer:
Year 1
Jan. 8. Purchased a used delivery truck for $24,000, paying cash.
Dr Truck 24,000 Cr Cash 24,000Mar. 7. Paid garage $900 for changing the oil, replacing the oil filter, and tuning the engine on the delivery truck.
Dr Maintenance expenses - Truck 900 Cr Cash 900Dec. 31. Recorded depreciation on the truck for the fiscal year. The estimated useful life of the truck is four years, with a residual value of $4,000 for the truck.
Depreciation expense = 2 x 0.25 x $24,000 = $12,000
Dr Depreciation expense 12,000 Cr Accumulated depreciation - truck 12,000Year 2
Jan. 9. Purchased a new truck for $50,000, paying cash.
Dr Truck new 50,000 Cr Cash 50,000Feb. 28. Paid garage $250 to tune the engine and make other minor repairs on the used truck.
Dr Maintenance expenses - Truck 250 Cr Cash 250Apr. 30. Sold the used truck for $9,500. (Record depreciation to date in Year 2 for the truck.)
depreciation expense = 2 x 0.25 x 4/12 x $12,000 = $2,000
Dr Depreciation expense 2,000 Cr Accumulated depreciation - truck 2,000truck sold at $9,500 - $10,000 (carrying value) = -$500 loss on sale
Dr Cash 9,500Dr Accumulated depreciation 14,000Dr Loss on sale - truck 500 Cr Truck 24,000Dec. 31. Record depreciation for the new truck. It has an estimated residual value of $12,000 and an estimated life of eight years.
Depreciation expense = 2 x 0.125 x $50,000 = $12,500
Dr Depreciation expense 12,500 Cr Accumulated depreciation - truck new 12,500Year 3
Sept. 1. Purchased a new truck for $58,500, paying cash.
Dr Truck three 58,500 Cr Cash 58,500Sept. 4. Sold the truck purchased January 9, Year 2, for $36,000. (Record depreciation to date for Year 3 for the truck.)
Depreciation expense = 2 x 0.125 x 8/12 x $37,500 = $6,250
Dr Depreciation expense 6,250 Cr Accumulated depreciation - truck new 6,250truck sold at $36,000 - $31,250 (carrying value) = $4,750 gain on sale
Dr Cash 36,000Dr Accumulated depreciation 18,750 Cr Truck new 50,000 Cr Gain on sale - truck new 4,750Dec. 31. Recorded depreciation on the remaining truck. It has an estimated residual value of $16,000 and an estimated useful life of 10 years.
Depreciation expense = 2 x 0.1 x 4/12 x $58,500 = $3,900
Dr Depreciation expense 3,900 Cr Accumulated depreciation - truck three 3,900The journal entries for the purchase of the truck on January 1, 2023, and the depreciation expense for the year 2023 using the double-declining-balance method are recorded.
To record the purchase of the truck and depreciation expense for the year 2023 using the double-declining-balance method:
Purchase of the Truck (January 1, 2023):
Debit: Delivery Truck (asset) $60,000
Credit: Cash or Accounts Payable $60,000
Depreciation Expense for 2023:
Calculate annual depreciation:
Annual Depreciation = (2 / Useful Life) * Book Value at Beginning of Year
For the first year (2023):
Depreciation Expense = (2 / 6) * (Cost - Accumulated Depreciation)
Debit: Depreciation Expense $20,000
Credit: Accumulated Depreciation $20,000
This entry reflects the application of the double-declining-balance method, where depreciation is accelerated, with a higher expense in the early years. The truck's book value at the end of 2023 will be $40,000 ($60,000 - $20,000).
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Complete question below:
A company purchased a new delivery truck for $60,000 on January 1, 2023, with an estimated useful life of six years and a residual value of $8,000. The company uses the double-declining-balance method of depreciation. Prepare the journal entries for the purchase of the truck and the depreciation expense for the year 2023.
Oriole Company was formed on December 1, 2019. The following information is available from Oriole's inventory record for Product X.
Units Unit Cost
January 1, 2020 (beginning inventory) 2,000 $15
Purchases:
January 5, 2020 2,500 $17
January 25, 2020 2,200 $18
February 16, 2020 1,100 $19
March 15, 2020 2,200 $20
A physical inventory on March 31, 2020, shows 3,300 units on hand.
Required:
(a) Prepare schedules to compute the ending inventory at March 31, 2020, under FIFO method.
Answer:
FIFO Ending Inventory $ 64900
Explanation:
Oriole Company
Date Particulars Units Unit Cost Total Cost
January 1, (beginning inventory) 2,000 $15 30,000
January 5, Purchases: 2,500 $17 42500
January 25, Purchases: 2,200 $18 39600
February 16, Purchases: 1,100 $19 20900
March 15, Purchases: 2,200 $20 44000
Total 10,000 $ 177000
A physical inventory on March 31, 2020, shows 3,300 units on hand.
FIFO means first in first out. It is a method of calculating inventory items. In it the first items purchased are sold out first. Following this rulethe ending inventory FIFO can be calculated by moving backwards from March 15 purchases as follows.
FIFO Ending Inventory $ 64900
March 15 Purchases 2,200 units at $20=$ 44000
February 16,Purchases units 1,100 at $19 =$20900
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense:
a. A patent with a 15-year remaining legal life was purchased for $280,000. The patent will be commercially exploitable for another seven years.
b. A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $44,100 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 18 years and is currently worth $378,000.
c. A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for five years was obtained at a cost of $63,000. Satisfactory sales performance over the five years permits renewal of the franchise for another four years (at an additional cost determined at renewal).
a. Annual amortization expense for the patent is $40,000. Journal entry:
[tex]\[ \text{Amortization Expense} 40,000 \text{ Accumulated Amortization - Patent}[/tex] 40,000
b. Annual amortization expense for the patent is $21,000. Journal entry:
[tex]\[ \text{Amortization Expense} 21,000 \text{ Accumulated Amortization - Patent}[/tex] 21,000
c. Annual amortization expense for the franchise is $12,600. Journal entry:
[tex]\[ \text{Amortization Expense} 12,600 \text{ Accumulated Amortization - Franchise}[/tex] 12,600
a. For the patent with a 15-year remaining legal life purchased for $280,000, but commercially exploitable for another seven years:
Annual Amortization Expense = Total Cost / Remaining Commercially Exploitable Years
Annual Amortization Expense = $280,000 / 7 years
Annual Amortization Expense = $40,000 per year
Journal Entry:
[tex]\text{Amortization Expense} 40,000[/tex]
[tex]\[ \text{ Accumulated Amortization - Patent} 40,000\][/tex]
b. For the acquired patent on a device with a remaining legal life of 18 years, purchased for $378,000:
Annual Amortization Expense = Total Cost / Remaining Legal Life
Annual Amortization Expense = $378,000 / 18 years
Annual Amortization Expense = $21,000 per year
Journal Entry:
[tex]\[ \text{Amortization Expense} 21,000\][/tex]
[tex]\[ \text{ Accumulated Amortization - Patent}[/tex] 21,000
c. For the franchise granting exclusive distribution rights obtained for $63,000 with a life of five years, extendable for another four years upon renewal:
Annual Amortization Expense = Total Cost / Total Legal Life
Annual Amortization Expense = $63,000 / 5 years
Annual Amortization Expense = $12,600 per year
Journal Entry:
[tex]\[ \text{Amortization Expense}[/tex] 12,600
[tex]\[ \text{ Accumulated Amortization - Franchise}[/tex] 12,600
These journal entries record the annual amortization expenses for each scenario by debiting the Amortization Expense account and crediting the respective Accumulated Amortization accounts.
Boysenberry Corp. has the following information for the months of January, February, and March of the current year: JanuaryFebruaryMarch Units produced10,00010,00010,000 Units sold9,5009,4009,800 Production costs per unit (based on 10,000 units) are as follows: Direct materials$20.00 Direct labor15.00 Variable factory overhead8.00 Fixed factory overhead4.00 Variable selling and admin. expenses10.50 Fixed selling and admin. expenses5.75 There was no beginning inventory in the month of January, and all units were sold for $75. Costs were stable over the three months. Calculate Boysenberry's ending inventory cost for February using the absorption costing method.
Answer:
$51,700
Explanation:
The computation of ending inventory cost is shown below:-
Product cost per unit = Direct material + Direct labor + Variable factory overhead + Fixed factory overhead
= $20 + $15 + $8 + $4
= $47
Ending inventory, February = 10,000 + 10,000 - 9,500 - 9,400
= 1,100
Ending inventory value under absorption costing = Product cost per unit × Ending inventory, February
= $47 × 1,100
= $51,700
Therefor for computing the ending inventory value under absorption costing we simply applied the above formula.
Using the intuitive least cost method for the given transportation problem, answer the following: Cleveland Dayton Erie Supply Allentown $22 $16 $21 100 Philadelphia $28 $27 $18 150 Harrisburg $25 $23 $19 175 Demand 175 175 175 What is the maximum quantity that can be shipped from Allentown to Erie? 100 What is the maximum quantity that can be shipped from Harrisburg to Cleveland? 175 What is the maximum quantity that can be shipped from Harrisburg to Dayton? 75 Which demand location will have an unmet demand? Cleveland Answer 1:
Answer:
The demand location where demand is unmet is equal to Cleveland. Received only 75 units. 100 units demand is unmet.
Explanation:
Solution
From the example given, we solve for which demand location will have an unmet demand
Now,
The maximum quantity that can be shipped from Allentown to Erie is 100.
The Maximum quantity that can be shipped from Harrisburg to Cleveland is 175
While,
The Maximum quantity that can be shipped from Harrisburg to Dayton is 175
Hence, in case we want an solution optimum to get the required demand as many as possible with the supply given and with a low costs, then we need to find the optimum solution.
By applying a least cost method called greedy, we need to remove our least costing node and then provide minimum of demand and supply unit a present to each cell.
Thus,
The first least cost is Allentown to Dayton.
From Allentown to Dayton 100 units. Next least cost is Philadelphia to Erie.
From Philadelphia to Erie 150 units. Next least cost is Harrisburg to Erie.
From Harrisburg to Erie 25 units. Next least cost is Harrisburg to Dayton.
From Harrisburg to Dayton 75 units. Next least cost is Harrisburg to Cleveland
From Harrisburg to Cleveland 75 units.
So, for the optimum solution, the right choice of answer will be
From Allentown to Erie = 0 units
From Harrisburg to Cleveland = 75 units
From Harrisburg to Dayton = 75 units
Therefore, The demand location where demand is unmet is equal to Cleveland. Received only 75 units. 100 units demand is unmet.
The maximum shipment from Allentown to Erie is 100 units, from Harrisburg to Cleveland is 175 units, and from Harrisburg to Dayton is 75 units. After these shipments, no location has unmet demand.
Explanation:The problem at hand relates to the Intuitive Least Cost Method which is a method used in the field of operations research for solving transportation problems. The methodology seeks to minimize the total transport cost while meeting the demand and supply constraints at various sites.
From the provided matrix, the maximum quantity that can be shipped from Allentown to Erie is 100 units as indicated by the supply limit of Allentown. Similarly, Harrisburg can ship a maximum of 175 units to Cleveland and 75 units to Dayton, since after fulfilling the Cleveland demand, 75 units remain for Dayton. Finally, observing the demand, we see that Cleveland will still require 175 - 175 = 0 units, Dayton 175 - 100 = 75 units and Erie 175 - 100 = 75 units. Therefore, no location remains with unmet demand.
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On November 1, 2018, Arch Services issued $ 305 comma 000 of eightminusyear bonds with a stated rate of 11% at par. Interest payments occur each April 30 and October 31. On December 31, 2018, Arch made an adjusting entry to accrue interest at yearminusend. What is the amount of Interest Expense that will be recorded on December 31, 2018? (Do not round any intermediate calculations, and round your final answer to the nearest dollar.)
Answer:
$5,603
Explanation:
The calculation of Interest Expense is shown below:-
Interest made accrued on Dec 31, 2018 = Services issued × Stated rate × Remaining months ÷ Number of Months in a year
= $305,000 × 11% × 2 ÷ 12
= $305,000 × 11% × 0.167
= $5,603
Therefore for computing the Interest Expense we simply applied the above formula.
A risk-averse individual _____. A. will avoid all risky investments no matter what the return B. will forgo a sure return in favor of an uncertain prospect generating the same expected return C. prefers a sure return to an uncertain prospect generating the same expected return D. is indifferent between a sure return and an uncertain prospect generating the same expected return
CPR: Change in principle reported retrospectively CPP: Change in principle reported prospectively CES: Change in estimate CRE: Change in reporting entity PPA: Prior period adjustment required ____ Change from FIFO inventory costing to LIFO inventory costing. ____ Change from LIFO inventory costing to FIFO inventory costing. ____ Change in the composition of a group of firms reporting on a consolidated basis. ____ Change to the installment method of accounting for receivables. ____ Change in actuarial assumptions for a defined benefit pension plan. ____ Change from sum-of-the-years' digits depreciation to straight-line. ____ Change from expensing extraordinary repairs erroneously recorded as an expense to capitalizing the expenditures. ____ Change in the percentage used to determine warranty expense. ____ Change from reporting postretirement benefits according to the provisions of U.S. GAAP. ____ Change in the residual value of machinery.
Answer:
CPP: Change from FIFO inventory costing to LIFO inventory costing. CPR: Change from LIFO inventory costing to FIFO inventory costing. CRE: Change in the composition of a group of firms reporting on a consolidated basis.
CPR: Change to the installment method of accounting for receivables.
CES: Change in actuarial assumptions for a defined benefit pension plan.
CPP: Change from sum-of-the-years' digits depreciation to straight-line.
PPA: Change from expensing extraordinary repairs erroneously recorded as an expense to capitalizing the expenditures.
CES: Change in the percentage used to determine warranty expense.
CPP: Change from reporting postretirement benefits according to the provisions of U.S. GAAP.
CES: Change in the residual value of machinery.
Explanation:
CPR: Change in principle reported retrospectively.
CPP: Change in principle reported prospectively.
CES: Change in estimate.
CRE: Change in reporting entity. PPA: Prior period adjustment required.
The Molding Department of Kent Company has the following production data: beginning work in process 40,000 units (60% complete), started into production 680,000 units, and ending work in process 70,000 units (40% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are Select one: a. 678,000. b. not able to be determined from the provided information. c. 732,000. d. 708,000. e. 718,000.
Answer:
e. 718,000.
Explanation:
The computation of the equivalent unit for conversion cost is shown below
= Completed & transferred units × completion percentage + ending work in process inventory units × completion percentage
= 690,000 units × 100% + 70,000 units × 40%
= 690,000 units + 28,000 units
= 718,000 units
We simply considered the completed & transferred units and the ending work in process inventory units
On October 1, Eder Fabrication borrowed $55 million and issued a nine-month, 13% promissory note. Interest was payable at maturity. Prepare the journal entry for the issuance of the note and the appropriate adjusting entry for the note at December 31, the end of the reporting period.
Final answer:
A journal entry was made to record the borrowing of $55 million with a debit to cash and a credit to notes payable. An adjusting entry was also made to account for accrued interest expense of $1,787,500 with a debit to interest expense and a credit to interest payable on December 31.
Explanation:
Journal Entry for Issuance of the Note
When Eder Fabrication borrowed $55 million on October 1 and issued a nine-month, 13% promissory note where interest was payable at maturity, the journal entry on October 1 would be:
Debit Cash $55,000,000
Credit Notes Payable $55,000,000
This entry records the cash received and the company's obligation to pay back the principal amount of the note.
Adjusting Entry for Interest at December 31
To record the accrued interest at the end of the reporting period (December 31), the computation for the interest is as follows:
Interest = Principal x Rate x Time
Interest = $55,000,000 x 0.13 x (3/12)
Interest = $1,787,500
The journal entry on December 31 would be:
Debit Interest Expense $1,787,500
Credit Interest Payable $1,787,500
This entry recognizes the interest cost incurred during the period even though it has not been paid.
Hotelling. Two firms, labeled 1 and 2, are located at the ends of a Hotelling line of length 1. L customers are uniformly distributed along the line. Each customers wants to buy one unit of the product and the product is worth V to each customer. A customer located distance d from a given firm incurs travel cost td to purchase the product from that firm. Firms produce at constant marginal cost c < V, and they engage in Bertrand price competition.
The products of firms 1 and 2 are substitutes at the equilibrium prices if the demand for each firm's product increases with a small increase in the other firm's price, starting from the equilibrium price. If each firm's demand does not change with a small increase in the other firm's price starting from the equilibrium prices, ther independent in demand at the equilibrium prices. Which of the following statements is true?
a. The products are substitutes at the equilibrium prices regardless of the values of V, 1, and c.
b. The products are substitutes at the equilibrium prices If V is sufficiently large relative to t and c.
c. The products are independent in demand (and not substitutes) if iftis sufficiently large relative to V.
d. (a) and (b) are true
e. (b) and (c) are true
Answer:
(e) (b) and (c) are true
The products will surely act as substitutes if the consumer's valuation is larger than c and t at equilibrium prices. They would also act as substitutes when the values of distance and price are taken into account. Then if V is too small in comparison to t, the consumer may not demand either and they would not act as substitutes as the demand would now be independent just as stated in c