Answer:
The correct option is B,$2,631,204
Explanation:
The amount Wine corporation would realize from the sale of the bonds is the present value of all cash flows payable by the bond which includes the annual interest payments as well as the principal repayment in 10 years.
amount of interest payment=$3,000,000*8%=$240,000
The $240,000 would be received by investors for 10 years
The principal is the face value of $3000,000 payable in year ten
Present of face value=$3,000,000*0.3855=$1156500
present value of all interest payments=$240,000*6.1446=$1474704
Total present values=$1474704 +1156500 =$2631204
The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 10. Assume that Cane expects to produce and sell 72,000 Alphas during the current year. A supplier has offered to manufacture and deliver 72,000 Alphas to Cane for a price of $148 per unit. What is the financial advantage (disadvantage) of buying 72,000 units from the supplier instead of making those units
Answer:
The financial advantage of buying 72,000 units from the supplier instead of making those units is that Cane would not its traceable fixed manufacturing overhead.
If we assume that Cane's fixed costs are made up of traceable fixed manufacturing overhead of 60% or $60,000 and 40% of common fixed expenses or $40,000, then $60,000 would not be incurred by Cane in the period it decides to buy from the supplier.
Explanation:
Traceable fixed manufacturing overheads are the expenses that can be traced to production units. We can say that they are variable with production units or that production gives rise to them. This implies that when there is production, such costs are incurred, whereas, they are not when there is no production. They arise due to usage. For example, more utility energy is consumed based on production.
The common fixed expenses are allocated costs, including administrative expenses, for example. By their nature, they are generally unavoidable whether Cane decides to produce or buy from the supplier. And since they must be incurred and allocated, they are not relevant in making a buy or make decision.
Explanation of fixed costs and variable costs in business decisions.
Fixed costs remain constant regardless of production levels. Variable costs fluctuate with production levels. Average total cost includes all expenses divided by the number of units produced.
If fixed manufacturing overhead is avoidable, while common fixed expenses are unavoidable, considering a supplier offer involves analyzing the financial impact. The financial advantage or disadvantage of buying 72,000 units instead of producing them internally can be determined by comparing costs and benefits.
7. Identifying costs of inflation Shen manages a grocery store in a country experiencing a high rate of inflation. He is paid in cash twice per month. On payday, he immediately goes out and buys all the goods he will need over the next two weeks in order to prevent the money in his wallet from losing value. What he can't spend, he converts into a more stable foreign currency for a steep fee. This is an example of the of inflation.
Answer:
Shoe-leather Costs.
Explanation:
In Business management, Shoe-leather costs can be defined as the costs of time and effort people take to counteract the effect of high inflation on the depreciative purchasing power of money by visiting banks or other financial institutions regularly in order to limit inflation tax they pay on holding cash.
Metaphorically speaking, in a bid to protect the value of money or assets, people wear out the sole of their shoes by going to the bank regularly.
Hence, Shen is practicing a shoe-leather cost.
Vactin Motors, an automobile company, is a well-recognized brand. It does not have the capital and capabilities to set up manufacturing units abroad, although it is keen to have its products made in the foreign market. It decides to have the products produced and sold under its brand name.
1. In this case, which of the following modes of international market entry should be adopted by Vactin?Options:1) Joint venture2) Franchising3) Exporting4) Wholly owned subsidiaries
Answer:
3. Exporting
Explanation:
For a well-recognized brand like Vactin Motors who does not have enough capital to set up manufacturing units abroad, exporting would be the best mode of international market entry. One main reason for this is that the automobile company is a well-recognized brand. They also want to consider the risks associated before expanding.
Exporting is the process of selling locally made products to foreign countries. With this method, Vactin Motors can manage the resources it has in its home country in production of automobiles. Since there are no middle men, the cost of exportation is lower. This mode would also afford them the ability to protect their brand name. They would also make considerable profit.
QS 19-10 Computing contribution margin LO P2 D’Souza Company sold 6,000 units of its product at a price of $88.00 per unit. Total variable cost is $51.60 per unit, consisting of $40.80 in variable production cost and $10.80 in variable selling and administrative cost. Compute the contribution margin for this company.
Answer:
$218,400
Explanation:
The computation of contribution margin is here below:-
Units Cost per unit Total
Sales 6,000 $88 $528,000
Less:
Variable production cost 6,000 $40.8 $244,800
Variable selling and
administrative costs 6,000 $10.8 $64,800
Contribution margin $218,400
Therefore the we multiplied the sale unit with cost per unit, in the similar way we multiplied the Variable production cost unit with cost per unit and Variable selling and administrative costs with cost per unit to reach the contribution margin.
Sobota Corporation has provided the following partial listing of costs incurred during August: Marketing salaries $ 50,600 Property taxes, factory $ 17,700 Administrative travel $ 99,500 Sales commissions $ 57,300 Indirect labor $ 41,200 Direct materials $ 174,800 Advertising $ 142,900 Depreciation of production equipment $ 41,700 Direct labor $ 90,200 Required: a. What is the total amount of product cost listed above? b. What is the total amount of period cost listed above?
Answer:
A.Product cost $365,600
B.Period cost $350,300
Explanation:
Direct materials $174,800
Direct labor $90,200
Manufacturing overhead:
Property taxes, factory $17,700
Indirect labor $41,200
Depreciation of production equipment $41,700
Total product cost $365,600
b.
Marketing salaries $50,600
Administrative travel $99,500
Sales commissions $57,300
Advertising $142,900
Total period cost $350,300
Mr. Radon's favorite place to buy shrimp in New Orleans was the Cajun Seafood market on Claiborne. He always stocked up on shrimp after he inspected the house he bought as an investment a few years ago. His trip was 685 miles one way to visit the property and even though gas was available at $1.88 per gallon and the car achieved 25 miles per gallon, it was an expensive and lengthy trip. Therefore he bought the cheapest plane tickets he could muster at $299 round trip and packed a cooler with $12 worth of ice. The shrimp were a bargain at $7.99 per pound for jumbos and he always tried to fit 35 pounds of the crustaceans in the cooler. What is the landed cost of a pound of shrimp
Final answer:
To calculate the landed cost of a pound of shrimp, we add the purchase price, transportation, and additional costs, and divide by the number of pounds. The total cost of $590.65 divided by 35 pounds equates to approximately $16.8764 per pound.
Explanation:
The student is asking to determine the landed cost of a pound of shrimp, which includes all expenses associated with purchasing and transporting the shrimp to the final destination. To calculate this, we'll add the total cost of buying and transporting the shrimp and then divide by the number of pounds purchased.
First, we calculate the total cost of the shrimp:
35 pounds of shrimp at $7.99 per pound equals $279.65.
Round trip plane ticket is $299.
The cooler ice is $12.
Adding these together:
$279.65 (shrimp) + $299 (plane ticket) + $12 (ice) = $590.65.
To find the landed cost per pound, divide the total cost by the number of pounds:
$590.65 ÷ 35 pounds = $16.8764 per pound of shrimp when rounded to four decimal places.
FastNet Systems is a start-up company that makes connectors for high-speed Internet connections. The company has budgeted variable costs of $ 110 for each connector and fixed costs of $ 4 comma 500 per month. FastNet's static budget predicted production and sales of 100 connectors in August, but the company actually produced and sold only 74 connectors at a total cost of $ 25 comma 000. FastNet's flexible budget variance for total costs is
Answer:
Cost variance= $12,360 unfavorable
Explanation:
Giving the following information:
Standard costs:
Budgeted variable costs of $ 110 for each connector
Fixed costs of $4,500 per month.
Actual production= 74 connectors
Total cost= $25,000
First, we need to calculate the standard total cost:
Standard total cost= 4,500 + 110*74= $12,640
Now, we can determine the flexible budget cost variance:
Cost variance= 12,640 - 25,000= $12,360 unfavorable
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%
An analyst gathers the following information about Meyer, Inc.: Meyer has 1,000 shares of 8% cumulative preferred stock outstanding, with a par value of $100 and liquidation value of $110. Meyer has 20,000 shares of common stock outstanding, with a par value of $20. Meyer had retained earnings at the beginning of the year of $5,000,000. Net income for the year was $70,000. This year, for the first time in its history, Meyer paid no dividends on preferred or common stock. a. Calculate the total book value of Meyer's common stock. Total book value $ b. What is the book value per share of Meyer's common stock? (Round your answer to 2 decimal places.) Book value per share $
Answer:
Book value of common stock is $5,470,000
book value per share of common stock is $273.50
Explanation:
The book value of Meyer Inc's common stock comprises of the book value of total common stock plus the retained earnings as well as the net income for the year.No preferred dividends need be deducted because the company did not declare any dividends in the year under review.
The book value per share is the total book value arrived at using the approach above divided by the number of common stock outstanding.
Book value of common stock=(20,000*$20)+$5,000,000+$70,000=$5,470,000
Book value per share=$5,470,000/20,000=$273.50
Answer:
a. The total book value of Meyer's common stock is $5,470,000
b. The book value per share of Meyer's common stock is $273.50
Explanation:
a. In order to calculate the total book value of Meyer's common stock we would have to use the following formula:
Book value of equity=Par value of share+Retained Earnings+Net Income
Par value of the equity=20,000 shares×20=$400,000
Retained earnings=$5,000,000
Net income=$70,000
Book value of equity=$400,000+$5,000,000+$70,000
Book value of equity=$5,470,000
The total book value of Meyer's common stock is $5,470,000
b. In order to calculate the book value per share of Meyer's common stock we would have to use the following formula:
Book value per share=book value of equity
No. of common stock
book value per share=$5,470,000
20,000
book value per share=$273.50
The book value per share of Meyer's common stock is $273.50
On January 1, Year 1, Alla Co. sold a property to Mish Co. for $400,000 and simultaneously leased it back for 3 years. The carrying amount of the property was $280,000, and its fair value was $310,000. The leaseback was properly classified as an operating lease. What amount of gain on sale of the property was recognized by Alla on January 1, Year 1
Answer: $30,000
Explanation:
In accounting, the treatment of the Sale and Operating Leaseback operation is such that a gain is only recognized if the sales price is more than the fair value. In such a case the difference between the fair value and the carrying price is considered the Gain on Sale.
The Difference between the sales price and the fair value is to be amortized over the period of use.
Seeing as the selling price is more than the fair value, the Gain on Sale is therefore,
= Fair Value - Carrying Value
= 310,000 - 280,000
= $30,000
$30,000 is the amount of gain on sale of the property recognized by Alla on January 1, Year 1.
You are saving for retirement. To live comfortably, you decide you will need to save $ 2 million by the time you are 65. Today is your 29 th birthday, and you decide, starting today and continuing on every birthday up to and including your 65 th birthday, that you will put the same amount into a savings account. If the interest rate is 7 %, how much must you set aside each year to make sure that you will have $ 2 million in the account on your 65 th birthday?
Answer:
Annual deposit= $12,473.70
Explanation:
Giving the following information:
Final value= $2,000,000
Number of years= 37
Interest rate= 7%
To calculate the annual deposit required to reach the final value. We need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= {2,000,000*0.07)/ [(1.07^37) - 1]
A= $12,473.70
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.
Finney Company's condensed income statement is presented below: Revenues $988,000 Expenses Cost of goods sold $400,000 Operating and administrative expenses 204,000 Depreciation expense 39,000 643,000 Income before taxes 345,000 Income tax expenses 78,000 Net income $267,000 Earnings per share (100,000 shares) $2.67 The following data is compiled relative to Finney's operating segments: Percent Identified with Segment Hotels Grains Candy Revenues 42 % 51 % 7 % Cost of goods sold 46 48 6 Operating and administrative expense 34 51 15 Depreciation expense 46 43 11 Included in the amounts allocated to each segment on the above percentages are the following expenses which relate to general corporate activities: Operating Segment Hotels Grains Candy Totals Operating and administrative expense $13,000 $10,600 $4,500 $28,100 Depreciation expense 4,700 4,400 3,600 12,700 (a) Prepare a schedule showing the amounts distributed to each segment. Operating Segment Hotels Grains Candy Totals Revenues $ $ $ $ Expenses Cost of goods sold Operating and admin. expense Depreciation expense Total expenses Operating profit $ $ $ $
Answer:
Explanation:
Operating Segment
Hotels Grains Candy Totals
Revenues (1) $378,000 $450,000 $72,000 $900,000
Expenses—
Cost of goods sold (1) 192,000 196,000 12,000 400,000
Operating and admin. expense (2) 58,000 91,000 27,000 176,000
Depreciation expense (3) 14,900 12,800 2,300 30,000
Total expenses 264,900 299,800 41,300 606,000
Operating profit $113,100 $150,200 $30,700 $ 294,000
(1) Total times segment percentage.
(2) Hotels = ($200,000 × 35%) - $12,000 = $58,000
Grains = ($200,000 × 50%) - $9,000 = $91,000
Candy = ($200,000 × 15%) - $3,000 = $27,000
(3) Hotels = ($40,000 × 46%) - $3,500 = $14,900
Grains = ($40,000 × 42%) - $4,000 = $12,800
Candy = ($40,000 × 12%) - $2,500 = $2,300
Final answer:
To distribute amounts to each segment, multiply the consolidated income statement items by the corresponding segment percentages, subtract general corporate expenses, and calculate the operating profit by subtracting total expenses from revenues.
Explanation:
To calculate the amounts distributed to each operating segment of Finney Company based on the provided data and percentages, we need to allocate each line of the consolidated income statement (Revenues, Cost of Goods Sold, Operating and administrative expenses, and Depreciation expense) to these segments. Using the percentages identified with each segment (Hotels, Grains, and Candy) and the totals provided, we can allocate the consolidated amounts to each of the individual segments.
For example, we can allocate the Revenues to the Hotels segment by multiplying the total Revenues by the percentage corresponding to the Hotels segment (42%). Similar calculations can be done for other expenses by multiplying the respective total amounts by the percentages of each segment. Furthermore, we also need to subtract the general corporate activities expenses from the corresponding amounts in each segment. Once all the allocations and adjustments are made, we arrive at the operating profit for each segment by subtracting the total expenses from the revenues.
At the beginning of the year, Goldenrod had beginning inventory of 2,000 scooters. Goldenrod estimates it will sell 5,000 units during the first quarter of the current year, with a 10% increase in sales each quarter. It is Goldenrod’s policy to maintain an ending inventory equal to 20% of the next quarter’s budgeted sales. Each scooter costs $100 to produce and sold for $150. How much is the budgeted sales revenue for the third quarter of the current year? $500,000. $825,000. $907,500. $605,000.
Answer:
$907,500
Explanation:
The budgeted sales for the 3rd quarter is a function of the number of scooters expected to be sold in the quarter and the unit selling price.
Given that the sales are expected to increase by 10% every quarter and the first quarter sales are 5000 units,
Second quarter sales
= 5000 + 10% * 5000
= 5500 units
3rd quarter sales
= 5500 + 10% * 5500
= 6050 units
Selling price per units given is $150
The budgeted sales revenue for the third quarter of the current year
= $150 * 6050
= $907,500
Concord Water is considering introducing a water filtration device for its 20-ounce water bottles. Market research indicates that 1,000,000 units can be sold if the price is no more than $3. If Concord Water decides to produce the filters, it will need to invest $2,000,000 in new production equipment. Concord Water requires a minimum rate of return of 18% on all investments. Determine the target cost per unit for the filter.
Answer:
Target cost per unit= $2.64
Explanation:
The target cost is arrived at by subtracting the a desired profit margin from a competitive selling price.
The target cost per unit =
((selling price × qty) - (cost of capital(%) × initial cost))/No of units
=( (3× 1,000,000) - (18%×2,000,000) )/ 1,000,000
= 2.64
Target cost per unit= $2.64
Cactus Baseball Stadium is trying to determine how many ticket scanners are needed to admit fans entrance. The stadium has 4 outfield bleacher sections: sections 1 and 3 in the right field and sections 2 and 4 in the left field. Fans use the backside of the stadium's entrance to get to these 4 sections. 40 people per minute show up to a game with their ticket (assume uniform distribution of location - that is each fan is equally likely to go to section 1, 2, 3, or 4). On average, it takes 5 seconds per person to process their ticket at a scanner and pass through the turnstiles. The backside stadium entrance is designed to hold up to 50 people waiting before getting to the ticket scanners.
Using the above, answer the following:
(a) Buffer Capacity (K)
(b) Customer Inflow (Arrival) Rate (Ri)
(c) Total Processing Rate (Capacity) (Rp)
Answer:
Explanation:
Arrival rate = 40 people per minute
Service rate = 5 seconds per person = 12 people per minute
b) Customer Inflow (Arrival) Rate (Ri)
Ri = Arrival Rate = 40 per minute
Inter arrival Time = 1 / Ri = 1 / 40 minutes
c) Total Processing Rate (Capacity) (Rp)
Processing Time = Tp = 5 seconds =
5/60 minutes
= 1/12 minutes
Processing Rate = Rp = 1 / Tp = 1 / (1/12) = 12 customers per minute
Server utilization = Throughput Rate R / Rp
Chi = Lambda / Miu ( must be < 1 )
Ls = Chi / (1-Chi)
Lq = Ls - Chi
Ws = Ls / Lambda
Wq = Lq / Lambda
Buffer capacity K = 50
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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Which statement(s) below is TRUE?
A. Goodwill cannot decrease on balance sheet from one year to the next.
B. Goodwill is the same term often used for intangibles.
C. Intangibles increase when treasury stock increases.
D. FASB Rule 16 requires companies to admit once a year whether the premiums they paid for acquisitions, called goodwill, were a waste of money.
E. Seeing Goodwill regularly increasing on a balance sheet is not a good thing.
Answer:
E) Seeing Goodwill regularly increasing on a balance sheet is not a good thing.
Explanation:
Generally US GAAP requires that goodwill is tested annually in order to determine if it must decrease or not. Companies must verify if impairment losses must be reported or assets must be written down.
Goodwill cannot be amortized, but it can decrease (and generally does) from year to year, so seeing it increase is not a good thing.
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
The Mega Construction Company recently switched to activity-based costing (ABC) from the department allocation method. The department method allocated overhead costs at a rate of $60 per machine hour. The cost accountant for the Finishing Department has gathered the following data: Activity Cost Drivers Amount Material handling Tons of material handled $ 80 Machine setups Number of production runs 4,000 Utilities Machine hours 15 Quality control Number of inspections 600 During April, Mega purchased and used $115,000 of direct materials at $20 per ton. There were 8 production runs using a total of 11,000 machine hours in April. The manager of the Finishing Department needed 12 inspections. Actual overhead costs totaled $890,000 for the month. How much overhead costs were applied to the Work-in-Process Inventory during April using activity-based costing
Answer:
$664,200
Explanation:
Computation of the given data are as follow:-
Material Overhead = (Machine purchase price ÷ Direct material per ton) × Cost of material handling
= (115,000 ÷ 20) × 80
= $460,000
Set up of Machine = Production overhead =No. of production run × cost of production run
= 8 × $4,000 = $32,000
Quality Control = 12 × $600 = $7,200
Utilities Cost = 11,000 × $15 = $165,000
Work In Process Inventory During April = Material Overhead + Production Overhead + Quality Control + Utilities Cost
= $460,000 + $32,000 + $7,200 + $165,000
=$664,200
Using activity-based costing, the overhead applied to the Work-in-Process Inventory during April for Mega Construction Company is $664,200.
Explanation:The student asked about calculating the overhead costs applied to the Work-in-Process Inventory for the Mega Construction Company using activity-based costing (ABC) for the month of April. To determine this, we must apply the overhead rates for each activity to the actual amount of cost drivers incurred during the month.
First, since the Mega Construction Company purchased and used $115,000 of direct materials and we know they cost $20 per ton, we can calculate the tons of materials handled: $115,000 / $20 = 5,750 tons.
The overhead cost for each activity is calculated as follows:
Material handling: 5,750 tons * $80/ton = $460,000Machine setups: 8 setups * $4,000/setup = $32,000Utilities: 11,000 machine hours * $15/hour = $165,000Quality control: 12 inspections * $600/inspection = $7,200Adding these amounts together, the total applied overhead costs using activity-based costing for April are:
$460,000 + $32,000 + $165,000 + $7,200 = $664,200.
Cobe Company has already manufactured 19,000 units of Product A at a cost of $25 per unit. The 19,000 units can be sold at this stage for $400,000. Alternatively, the units can be further processed at a $200,000 total additional cost and be converted into 5,200 units of Product B and 11,000 units of Product C. Per unit selling price for Product B is $108 and for Product C is $55. 1. Prepare an analysis that shows whether the 19,000 units of Product A should be processed further or not.
Answer:
Incremental net income from further processing is $566,600
Explanation:
First of all, it would be necessary to compute profit from selling the product at cut off point and profit when it is further processed in order to determine whether or not it is worth processing further:
Sales revenue $400,000
cost of production(19,000*$25) $475,000
Loss from selling ($75,000)
Further processing:
sales revenue
Product B(5200*$108) $561,600
Product C(11,000*$55) $605,000
Total revenue $1,166,600
total cost
cost of production ($475,000)
cost of further processing ($200,000)
total costs ($675,000)
Profit $491600
By further processing the incremental net profit is $566,600 ($491,600-(-$75000)
Suppose a person quits a job earning $45 comma 000 per year and starts a business with $175 comma 000 withdrawn from a money-market account earning 12 percent per year. The implicit cost of the business is ________ for the entrepreneur’s time plus ________ for the entrepreneur’s funds.
Answer:
$45,000 and $21,000
Explanation:
The computation of the implicit cost and the extra amount is shown below:
Implicit cost means the cost of opportunity lost so quitting job means opportunity cost.
Therefore,
The implicit cost of the business is $45,000 per year for the entrepreneur’s time plus the amount is $21,000 for the fund of entrepreneur
= $175,000 × 12%
= $21,000
Information related to Mingen back Company for 2015 is summarized below: Instructions: A. What amount of bad debt expense will Mingen back Company report if it uses the direct write-off method of accounting for bad debts? B. Assume that Mingen back Company estimates its bad debt expense to be 2% of credit sales. What amount of bad debt expense will Mingen back record if it has an Allowance for Doubtful Accounts credit balance of $4,000? C. Assume that Mingen back Company estimates its bad debt expense based on 6% of accounts receivable. What amount of bad debt expense will Mingen back record if it has an Allowance for Doubtful Accounts credit balance of $3,000? D. Assume the same facts as in (c), except that there is a $3,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Mingen back record? E. What is the weakness of the direct write-off method of reporting bad debt expense?
Answer:
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Explanation:
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.
Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 30,000 Total fixed manufacturing overhead cost $ 252,000 Variable manufacturing overhead per machine-hour $ 2.10 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials $ 675 Direct labor cost $ 1,050 The estimated total manufacturing overhead is closest to:
Answer:
Total estimated manufacturing overhead= $315,000
Explanation:
Giving the following information:
Estimates:
Total machine-hours 30,000
Total fixed manufacturing overhead cost $ 252,000
Variable manufacturing overhead per machine-hour $ 2.10
Total estimated manufacturing overhead= fixed overhead + total variable overhead
Total estimated manufacturing overhead= 252,000 + 30,000*2.1
Total estimated manufacturing overhead= $315,000
Answer:
Manufacturing overhead applied 315
Total cost of Job T687 $2,040
Explanation:
Lupo Corporation
Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base
Hence:
$252,000 + ($2.10 per machine-hour × 30,000 machine-hours) = $252,000 + $63,000 = $315,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base
= $315,000 ÷ 30,000 machine-hours = $10.50 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job
= $10.50 per machine-hour × 30 machine-hours = $315
Direct materials$ 675
Direct labor 1,050
Manufacturing overhead applied 315
Total cost of Job T687 $2,040
Therefore the estimated total manufacturing overhead is closest to $315 and the Total cost of Job T687 is $2,040
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
Kraft, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2013. Service cost $ 250,000 Contributions to the plan 220,000 Actual return on plan assets 180,000 Projected benefit obligation (beginning of year) 2,400,000 Fair value of plan assets (beginning of year) 1,600,000 The expected return on plan assets and the settlement rate were both 10%. The amount of pension expense reported for 2013 is
Answer:
The amount of pension expense reported for 2013 is $330,000
Explanation:
In order to calculate the amount of pension expense reported for 2013 we would have to use and calculate the following formula according to the given data:
amount of pension expense reported for 2013= $250,000 + ($2,400,000 × 0.10) - ($1,600,000 × 0.10)
amount of pension expense reported for 2013= $330,000
The amount of pension expense reported for 2013 is $330,000
They plan to use their $40,000 is savings to cover the closing costs the bank will charge them, which are 1% of the amount they borrow from the bank. The rest of the savings will be used as a down payment. For example, if they borrow $330,000 using $20,000 for a down payment, the closing costs will be $3,300, which still leaves them some savings. Determine the largest amount they can use for a down payment and still pay the closing costs
Answer:
$3,131
Explanation:
The largest amount of down payment can occur in a situation where all the $40,000 is spend for the down payment and closing costs.
Let assume
X is the amount of closing cost While Y is the Amount of down payment
X + Y = $40,000 equation (1)
Purchase price = $330,000 + $20,000
= $350,000
X = ($350,000 - Y) x 1% equation (2)
Let Substitute (2) to (1):
($350,000 - Y) x 1% + Y = $40,000
Y = $36,869
Hence:
X = $40,000 - $36,869 = $3,131
Therefore largest amount they can use for a down payment and still pay the closing costs will be $3,131
To calculate the largest amount that can be used for a down payment while still paying the closing costs, we need to solve for the maximum loan amount. Based on the conditions provided, the maximum down payment is approximately $39,604.
Explanation:The subject of the question is determining the maximum amount that can be allocated for a down payment, given that part of the savings must cover the closing costs which are 1% of the borrowed amount. In this case, if the entire $40,000 savings were used to cover both the down payment and the closing costs, we would need to solve for the maximum loan amount.
Let's denote the borrowed amount as 'B'. The equation to solve would be 0.01B (closing cost) + B (loan) = 40,000 (total savings). Solving for 'B', we find that B ≈ $39,604. This means the maximum down payment would be $40,000 - 0.01 * $39,604 ≈ $39,604.
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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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Weston Corporation just paid a dividend of $3.75 a share (i.e., D0 = $3.75). The dividend is expected to grow 9% a year for the next 3 years and then at 4% a year thereafter. What is the expected dividend per share for each of the next 5 years? Do not round intermediate calculations. Round your answers to the nearest cent.
Answer:
D1 = $4.085
D2 = $4.46
D3 = $4.86
D4 = $5.01
D5 = $5.16
Explanation:
As per the data given in the question,
DO = $3.75
Dividend expected to grow = 9%
Dividend grow later = 4%
D1 = DO(1+ Dividend1) = $3.75(1+9%)
=$3.75(1.09)
=$4.085
D2 = DO(1+ Dividend1 )( 1 + Dividend2)
= $3.75(1+9%)(1+9%)
= $4.46
D3 = DO(1+Dividend1)(1+Dividend2)(1+Dividend3)
= $3.75(1+9%)(1+9%)(1+9%)
= $4.86
D4 = DO(1+Dividend1)(1+Dividend2)(1+Dividend3)(1+Dividend later)
= $3.75(1+9%)(1+9%)(1+9%)(1+3%)
= $5.01
D5 = DO(1+Dividend1)(1+Dividend2)(1+Dividend3)(1+Dividend later)(1+Dividend later)
= $3.75(1+9%)(1+9%)(1+9%)(1+3%)(1+3%)
= $5.16