The accounting equation, assets = liabilities + owner’s equity, denotes the relationship between a company's resources and the claims to these resources. The equation must always balance due to the dual effect of each transaction. Transactions affect owner's equity, and net income or loss directly impacts this equity.
Explanation:The accounting equation, assets = liabilities + owner’s equity, is a fundamental concept in financial accounting. This equation shows the relationship between economic resources and the claims to these resources. Assets represent economic resources of the company. Liabilities represent claims of creditors and owner’s equity represents the claims of the owners.
a. The accounting equation always must balance because every financial transaction has an equal effect on both sides of the equation.
b. Transactions that increase owner's equity include revenues and injection of capital by owners, while expenses or withdrawal of capital by owners decrease owner's equity.
c. Net income or loss directly affects owner’s equity. If the company has a net income, it increases owner’s equity. Conversely, a net loss decreases owner’s equity.
d. For instance, if a business takes a loan of $20,000, its assets (cash) increase by $20,000 and its liabilities (loan) also increase by $20,000. Hence, the accounting equation is balanced.
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A newspaper article informs you that most businesses reduced production in the last quarter of the year, but also sold from their inventories during that quarter. Based on this information, GDP llikely___________.
1. increased.
2. decreased.
3. stayed the same.
4. may have increased, decreased, or stayed the same.
Answer:
2. decreased.
Explanation:
GDP represents the monetary value of all goods and services produced within a nation's geographic borders over a specified period of time. So, since production is reduced, it means GDP will decrease.
Which of the following is not part of the materials activity in the flow of manufacturing activities?
a. Beginning raw materials
b. Beginning work in process
c. Raw materials purchases
d. Raw materials available for use
e. Ending raw materials
Final answer:
In the context of manufacturing activities, 'Beginning work in process' is not part of the materials activity because it refers to materials already being converted into finished goods, which is distinct from initial materials handling and procurement.
Explanation:
The flow of manufacturing activities encompasses several stages which are involved in the handling of raw materials and their transformation into finished products. The stages typically include the procurement of beginning raw materials, purchase of additional raw materials, raw materials available for use, and the computation or valuation of ending raw materials. The option that does not fit into this category of materials activity, and thereby, is not part of the flow of manufacturing activities is b. Beginning work in process. This is because 'work in process' refers to materials that have already been partially converted into finished goods and so they are a different stage of the manufacturing process, beyond the initial handling and procurement of raw materials.
Lusk Company produces and sells 16,100 units of Product A each month. The selling price of Product A is $31 per unit, and variable expenses are $25 per unit. A study has been made concerning whether Product A should be discontinued. The study shows that $71,000 of the $111,000 in fixed expenses charged to Product A would continue even if the product was discontinued. These data indicate that if Product A is discontinued, the company's overall net operating income would:
decrease by $54,400 per month
increase by $14,400 per month
decrease by $56,600 per month
increase by $54,400 per month
Answer:
decrease by $56,600 per month
Explanation:
The impact on the net operating income would be shown below:
In the first case,
Sales ( $31 × 16,100 units) = $499,100
Variable expenses ($25 × 16,100 units) = - $402,500
Fixed expenses = - $111,000
Net loss = - $14,400
And, the fixed cost not avoidable cost is $71,000
So, the net income decreased by
= $71,000 - $14,400
= $56,600
if the product A is discontinued
People end up tossing 12% of what they buy at the grocery store (Reader's Digest, March, 2009). Assume this is the true population proportion and that you plan to take a sample survey of 540 grocery shoppers to further investigate their behavior.a- Show the sampling distribution of ( p¯ ), the proportion of groceries thrown out by your sample respondentsb- what is the probability that the sample proportion will be within ±.02 of the population proportion?c- what is the probability that your survey will provide a sample proportion within ±.015 of the population proportion?
Answer:
Consider the following calculations
Explanation:
People end up tossing 12% of what they buy at the grocery store (Reader's Digest, March, 2009). Assume this is the true population proportion and that you plan to take a sample survey of 540 grocery shoppers to further investigate their behavior.
a- Show the sampling distribution of ( p¯ ), the proportion of groceries thrown out by your sample respondents
sampling distribution of ( p¯ ) is normal with
mean = 0.12 and
standard error = sqrt(p(1-p)/n) = sqrt(0.12*0.88/540) =0.0140
b- what is the probability that the sample proportion will be within ±.03 of the population proportion?
z value for 0.03 difference, z=0.03/0.014 =2.14
The required P= P( -2.14<z<2.14) = P( z <2.14) – P( z <-2.14)
=0.9838 - 0.0162
=0.9676
c- what is the probability that your survey will provide a sample proportion within ±.015 of the population proportion?
z value for 0.015 difference, z=0.015/0.014 =1.07
The required P= P( -1.07<z<1.07) = P( z <1.07) – P( z <-1.07)
=0.8577 - 0.1423
=0.7154
d- What would be the effect of taking a larger sample on the probabilities in parts (b) and (c)? Why?
Taking a larger sample will decrease the standard error. The probabilities in parts (b) and (c) will increase.
The problem describes the usage of properties of the sampling distribution to solve calculation of proportions. It involves understanding of concepts such as population proportion, sample proportion, standard deviation and usage of z-values to find probabilities.
To solve this problem, we will be using properties of the sampling distribution. We will base our calculations according to formula p' = x/n, where x represents the 'successes' (in this case groceries thrown out), n represents the sample size, and p' is the sample proportion, serving as the point estimate for the population proportion.
a- In sampling distribution of sample proportion (p¯), p equals the population proportion (0.12), and q equals 1 - p (1 - 0.12 = 0.88). The sample size (n) is 540. Here, the mean (µ) of the sampling distribution is equal to p and the standard deviation is √pq/n, with both np and nq should be more than 5, which they are.
b- To calculate the probability that the sample proportion will be within ±.02 of the population proportion, we find z-values by subtracting the population proportion from the sample proportions and dividing it by the standard deviation. We then use these z values with a z-table or software to find the respective probabilities.
c- The same steps apply for determining the probability that the sample proportion is within ±.015 of the population proportion. Difference lies in the calculation of the z-values.
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Bortello Corporation produces high-quality leather boots. The company has a standard cost system and has set the following standards for materials and labor: Leather (12 strips @ $20) $240 Direct labor (10 hours @ $12) $120 Total prime cost $360 During the year Bortello produced 125 boots. Actual leather purchased was 1,700 strips, at $16 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 1,500 hours at $15 per hour. Compute the costs of leather and direct labor that should have been incurred for the production of 125 boots.
A. $46,500 and $37,500
B. $30,000 and $15,000
C. $36,000 and $36,000
D. $37,200 and $20,000
Answer:
B. $30,000 and $15,000
Explanation:
We can compute this as follows,
We need to calculate flexed budget costs for the production of 125 boots.
Budgeted / boots are as follows,
Leather cost / boot = $240
Direct Labor / boot = $120
The costs that should have been for 125 boots are then,
Leather = 125 * 240 = $30,000
Direct Labor = 125 * 120 = $15,000
Hope that helps.
Exchange rates Personal Finance Problem Fred Nappa is planning to take a wine-tasting tour through Italy this summer. The tour will cost 2,750 euros () and includes transportation, hotels, and a guide. Fred estimates that round-trip airfare from his home in North Carolina to Rome, Italy, will be $1,459, he also will incur another $290 in incidental travel expenses. Fred estimates the cost of meals in Italy to be about 519, and he will take an additional $1,090 to cover miscellaneous expenditures. Currently the exchange rate is $1.3423/1.00 (or 0.74499/$1.00). a. Determine the total dollar cost of the trip to Italy b. Deternine the amount of euros () Fred will need to cover meals and miscellaneous expendtures a. The total cost of the trip in dollars is s(Round to the nearest dollar) b. The amount of euros for meals and miscellaneous expenditures is (Round to the nearest euro)
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Consider a project with free cash flows in one year of $90,000 in a weak economy or $117,000 in a strong economy, with each outcome being equally likely. The initial investment required for the project is $80,000, and the project's cost of capital is 15%. The risk-free interest rate is 5%.Suppose that you borrow $60,000 in financing the project. According to MM proposition II, the firm's equity cost of capital will be closest to:A) 45%B) 30%C) 25%D) 35%
Answer:
Option (D) is correct.
Explanation:
Expected cash flow in year 1 : C1 = (0.5 × 90,000) + (0.5 × 117,000)
= 103,500
Discount rate, r = Project's WACC = 15%
Hence, Value of the project today = Vp = C1 ÷ (1 + r)
= 103,500 ÷ (1 + 15%)
= $90,000
Value of equity today : Ve0 = Vp - Debt
= 90,000 - 60,000
= 30,000
Value of equity in year 1 = Project cash flows - Debt × (1 + interest rate)
Weak economy = 90,000 - 60,000 × (1 + 5%)
= 27,000
Strong economy = 117,000 - 60,000 × (1 + 5%)
= 54,000
Expected value of equity in year 1 : Ve1 = (0.5 × 27,000) + (0.5 × 54,000)
= 40,500
Hence, Levered cost of equity, Ke = (Ve1 ÷ Ve0) - 1
= (40,500 ÷ 30,000 ) - 1
= 35%
Final answer:
According to MM proposition II, the firm's equity cost of capital is calculated using the initial investment, the amount of debt financing, the project's cost of capital, and the risk-free rate. In this case, the correct equity cost of capital is closest to 45%.
Explanation:
To determine the firm's equity cost of capital according to Modigliani and Miller's proposition II, with corporate taxes ignored, we utilize the formula: equity cost of capital = risk-free rate + (project cost of capital - risk-free rate) * (total value / equity value).
In this scenario, the initial investment is $80,000, of which $60,000 is financed with debt. Therefore, the equity value is $80,000 - $60,000 = $20,000. Given the project's cost of capital is 15% and the risk-free rate is 5%, we can calculate the equity cost of capital as follows:
Equity cost of capital = 5% + (15% - 5%) * ($80,000 / $20,000) = 5% + 10% * 4 = 5% + 40% = 45%
Therefore, the equity cost of capital is closest to 45%, making answer choice A correct.
An increase in the costs of resources or inputs of production would shift the ________.
A. short-run aggregate supply curve rightward
B. long-run aggregate supply curve rightward
C. short-run aggregate supply curve leftward
D. long-run aggregate supply curve leftward
Answer:
C. short-run aggregate supply curve leftward
Explanation:
When the cost of production or inputs of production increase the short run supply curve shifts left because the producers are now willing to sell less at the same price because it is more expensive for them to produce, so at every price the production decreases because of which the supply curve shifts left. The long run supply curve isn't affected by an increase in costs of resources because it is the potential of the economy and an increase in costs of does not change the potential of the economy.
When designing an Amazon SQS message-processing solution, messages in the queue must be processed before the maximum retention time has elapsed. Which actions will meet this requirement?
Explanation:
The Amazon Easy Queue Service was launched by Amazon.com in late 2004 and is a centralized message queueing up service. It supports programmatic message transmission through web services as a means of communication via the Internet.
Instantly, Amazon SQS removes messages in line for a longer period of retention of messages.
The automatic processing period for the response is 4 days. Furthermore, the maintenance period of the message can be determined by the Set Queue Attributes actions to reach between 60 and 1.209.600 seconds (14 days).
The systems view is important to managers because it a. underscores the importance of the organization's environment. b. allows them to eliminate the interaction among various elements of the organization. c. gives them a set procedure for making decisions. d. reduces their risk of human error. e. shifts the focus from outside the company to inside the company.
Answer: a.
Explanation: systems view of an organization refers to the parts of the organization interacts with the organization as an entity. System theory tries to prove the importance of an organized environment.
System view of an organization is developed on the knowledge that everything is interconnected. System view tends to see an organization as a United entity where similar approach is used in carrying out activities within the organization.
Flagstaff Company has budgeted production units of 9,800 for July and 10,000 for August. The direct materials requirement per unit is 3 ounces (oz.). The company has determined that it wants to have safety stock of direct materials on hand at the end of each month to complete 25% of the units of budgeted production in the following month. There was 7,350 ounces of direct material in inventory at the start of July. The total cost of direct materials purchases for the July direct materials budget, assuming the materials cost $1.20 per ounce, is:
Answer:
$35,460
Explanation:
The computation of the total cost of direct material purchase is shown below:
= Ending inventory + required production - beginning inventory
where,
Ending inventory would be
= 10,000 × 3 ounces × 25%
= 7,500 ounces
Opening inventory is 7,350 ounces
And, the required production would be
= 9,800 × 3 ounces
= 29,400 ounces
Now put these values to the above formula
So, the value would equal to
= 7,500 ounces + 29,400 ounces - 7,350 ounces
= 29,550 ounces
For $1.20 per pounce, it would be
= 29,550 ounce × $1.20
= $35,460
In a responsibility accounting system:
Select one:
a. Managers are responsible for their departments' controllable costs.
b. Each accounting report contains all items allocated to a responsibility center.
c. Organized and clear lines of authority and responsibility are only incidental.
d. All managers at a given level have equal authority and responsibility.
e. Outputs of the departments are not part of the evaluation process.
Answer:
Option A
Explanation:
A responsibility model in accounting refers to the program that collects and offers administrators details to assess the performance of department heads. In other expressions, this is a framework used to assess how good departments handle expenditures and handles costs.
The responsibility accountability mechanism is built on the notion that agencies should be properly managed as accurately as possible. The director and upper-level managers should not be responsible for the specific divisions daily activities.
In simple words, The accountability mechanism allows supervisors to manage and assign related costs depending on what they're doing at the moment.
In a responsibility accounting system, managers are held accountable for their departments' controllable costs and outcomes. Reports in such a system only include items that are allocated to a specific responsibility center. Clear lines of authority are essential in this system and evaluation includes the outputs of the departments.
Explanation:In a responsibility accounting system, managers are indeed responsible for their departments' controllable costs, which is option (a). The idea behind this system is to hold managers accountable for specific activities and have them completely own the costs and outcomes. Notably, in this framework, the accounting reports would only include the items that are allocated to a specific responsibility center (option b).
This system of accounting heavily depends on clear lines of authority and responsibility (contrary to option c). However, it could be argued that not all managers at a given level have equal authority and responsibility (contrary to option d), as different departments may have differing degrees of controllable costs. Finally, the outputs (results) of the departments are certainly part of the evaluation process (contrary to option e).
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A client is using the Sales on Account workflow. Instead of receiving a payment against the invoice, they add a new deposit categorized to an income account. What 2 problems will this cause?
Answer:
It will cause a major problem in case the client adds new deposit to an income account instead of receiving a payment.
Explanation:
Account receivables are the record of the invoices for which the client has not made payment yet. If the client adds a new deposit categorized to an income account instead of receiving a payment against the invoice, the first major problem would be that the Accounts Receivable balance of the client will not be accurate. It will create duplicate expenses as there was an entry made for a new deposit.
The second problem will be as a result of the first one that, the income account will show duplicate income and correct the correct income will not be recorded.
Beasley Industries' sales are expected to increase from $4 million in 2019 to $5 million in 2020, or by 25%. Its assets totaled $2 million at the end of 2019. Beasley is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2019, current liabilities are $760,000, consisting of $120,000 of accounts payable, $400,000 of notes payable, and $240,000 of accrued liabilities. Its profit margin is forecasted to be 4%, and its dividend payout ratio is 70%. Using the AFN equation, forecast the additional funds Beasley will need for the coming year. Do not round intermediate calculations. Round your answer to the nearest dollar.
Final answer:
Using the AFN equation, Beasley Industries will need additional funds totaling $350,000 for the coming year to support the projected increase in sales.
Explanation:
To forecast the additional funds needed (AFN) for Beasley Industries, we can use the AFN equation which is:
AFN = (A*/S0)ΔS - (L*/S0)ΔS - M(S1)(1 - dividend payout ratio), where:
A* = Assets tied directly to sales and required to support operations
S0 = Sales in the base year
ΔS = Change in sales
L* = Spontaneous liabilities (accounts payable, accrued liabilities) that will increase with sales
M = Profit margin
S1 = Sales in the year for which we are forecasting
In the given case, A* = $2 million.
S0 = $4 million in 2019 and S1 = $5 million in 2020, thus ΔS = $1 million.
L* = $120,000 (accounts payable) + $240,000 (accrued liabilities) = $360,000.
Profit margin M = 4% and the dividend payout ratio is 70%.
Now we calculate:
Asset increase needed to support new sales: (A*/S0)ΔS = ($2 million / $4 million) * $1 million = $0.5 million
Spontaneous liabilities increase with new sales: (L*/S0)ΔS = ($360,000 / $4 million) * $1 million = $90,000
Retained earnings available to fund new sales: M(S1)(1 - dividend payout ratio) = 4% * $5 million * (1 - 0.70) = $0.06 million
Subtracting the increase in spontaneous liabilities and the retained earnings from the asset increase required, we get the final AFN:
AFN = $0.5 million - $90,000 - $0.06 million = $0.5 million - $0.09 million - $0.06 million
AFN = $0.35 million, or $350,000.
Therefore, Beasley Industries will need an additional $350,000 for the coming year.
CompuTronics, a manufacturer of computer peripherals, has excess capacity. The company's Utah plant has the following per-unit cost structure for item no. 89:
Variable manufacturing $ 60
Fixed manufacturing 25
Variable selling 8
Fixed selling 11
Traceable fixed administrative 4
Allocated administrative 2
The traceable fixed administrative cost was incurred at the Utah plant; in contrast, the allocated administrative cost represents a "fair share" of CompuTronics' corporate overhead. Utah has been presented with a special order of 5,600 units of item no. 89 on which no selling cost will be incurred. The proper relevant cost in deciding whether to accept this special order would be:
a. $60.
b. $89.
c. $91.
d. $110.
e. None of these.
Answer:
a. $60.
Explanation:
While computing the relevant cost in case of special order only the variable manufacturing cost is to be considered as it will be changed in special order case.
And the other cot like - fixed manufacturing, variable & fixed selling, traceable fixed administrative cost, etc are not relevant as it remains constant
These costs are not useful for decision making. Hence, it is to be ignored
Variable manufacturing costs of $60 should be considered for deciding on whether to accept this special order as the relevant costs are always affected by the management decision.
What are Relevant Costs?
Relevant cost is a management accounting term that describes the avoidable costs incurred only when making certain business decisions. The concept of relevant costs is used to eliminate unnecessary data that can make the decision-making process difficult.
While calculating relevant costs in the event of a special order only variable production costs should be considered as they will be changed in the case of a special order.
And other costs like - consistent production, flexible & consistent sales, consistent management costs, etc. are not as important as they remain constant.
These costs are not helpful in making decisions. Therefore, it should be ignored.
Thus, Option A. is the correct choice.
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The following costs result from the production and sale of 4,550 drum sets manufactured by Tom Thompson Company for the year ended December 31, 2013. The drum sets sell for $305 each.
The company has a 40% income tax rate. Variable production costs Plastic for casing $ 127,400 Wages of assembly workers 423,150 Drum stands 168,350 Variable selling costs Sales commissions 118,300 Fixed manufacturing costs Taxes on factory 9,500 Factory maintenance 19,000 Factory machinery depreciation 79,000 Fixed selling and administrative costs Lease of equipment for sales staff 19,000 Accounting staff salaries 69,000 Administrative management salaries 149,000 Required: 1. Prepare a contribution margin income statement for the company.2. Compute its contribution margin per unit.
Answer:
See below.
Explanation:
Contribution margin income statement is as follows,
Sales (4,550*305) 1,387,750
Less: Variable costs
Plastic for casting 127,400
Wages 423,150
Drum Stand 168,350
Variable selling 118,300
Contribution 550,550
Less: Fixed costs
Taxes on factory 9,500
Maintenance 19,000
Depreciation 79,000
Lease of equipment 19,000
Accounting staff 69,000
Admin staff 149,000
Profit before tax 206,050
Tax @ 40% 82,420
Profit after tax 123,630
Contribution margin per unit can be calculated as,
Contribution margin / unit = Total contribution / Number of units
Contribution Margin / unit = 550,550 / 4550 = $121/unit
Contribution margin % = 121/305 = 39.6%
Hope hat helps.
Use the data provided on Cadbury to answer the question below. The risk free rate is 4.25%. The expected return on the market portfolio is 9.75%. The corporate tax rate is 40%. The face value of Cadbury's outstanding bonds is 2.450 billion pounds sterling. The coupon rate on Cadbury's bonds is 4.5%. Assume that the bonds pay annual coupons. The yield to maturity on Cadbury's bonds is 4.5%. Cadbury's bonds mature in 7 years. Cadbury has 1.650 billion common shares outstanding. The market price of Cadbury's common shares as of Dec 31, 2008 is 6.25 pounds sterling. Cadbury's Beta is 0.8. Cadbury's cost of debt (afterminus tax) is 2.7%. Cadbury's cost of equity is 8.65%. What is Cadbury's WACC?
Answer:
7.51%
Explanation:
The formula to compute WACC is shown below:
= (Weightage of debt) × (after cost of debt) + (Weightage of common stock) × (cost of common stock)
where,
Weighted of debt = Debt ÷ total firm
The total firm includes debt, and the equity which equals to
= 2.450 billion × $ 1 + 1.650 billion × $6.25
= 2.450 billion + 10.3125 billion
= 12.7625 billion
So, Weighted of debt = ($2.450 billion ÷ $12.7625 billion) = 0.192
And, the weighted of common stock = (Common stock ÷ total firm)
= $10.3125 billion ÷ $12.7625 billion
= 0.808
Now put these values to the above formula
So, the value would equal to
= (0.192 × 2.7%) + (0.808 × 8.65%)
= 0.5184% + 6.9892%
= 7.51%
Final answer:
The Weighted Average Cost of Capital (WACC) measures the average cost of capital for a company, taking into account the proportion of debt and equity financing. To calculate Cadbury's WACC, we need to find the weighted average cost of debt and the weighted average cost of equity. Assuming Cadbury has a 100% debt-to-equity ratio, the WACC can be calculated as follows: WACC = (Weight of Debt * Cost of Debt) + (Weight of Equity * Cost of Equity) = (0.5 * 2.7%) + (0.5 * 8.65%).
Explanation:
The Weighted Average Cost of Capital (WACC) measures the average cost of capital for a company, taking into account the proportion of debt and equity financing. To calculate Cadbury's WACC, we need to find the weighted average cost of debt and the weighted average cost of equity.
For Cadbury, the cost of debt (after tax) is given as 2.7% and the cost of equity is 8.65%. The weights for debt and equity can be calculated by dividing the respective values by the total capital structure.
Assuming Cadbury has a 100% debt-to-equity ratio, the WACC can be calculated as follows:
WACC = (Weight of Debt * Cost of Debt) + (Weight of Equity * Cost of Equity) = (0.5 * 2.7%) + (0.5 * 8.65%).
Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2019. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
2019 2020 2021
Net income $ 100,000 $ 120,000 $ 130,000
Dividends 40,000 50,000 60,000
Assume the partial equity method is applied.
1. How much does Pell record as Income from Demers for the year ended December 31, 2019?
Multiple Choice
a. $80,000.
b. $74,400.
c. $73,000.
d. $42,400.
e. $41,000.
2. How much does Pell record as income from Demers for the year ended December 31, 2020?
Multiple Choice
a. $90,400.
b. $89,000.
c. $50,400.
d. $96,000.
e. $56,000.
3. How much does Pell record as income from Demers for the year ended December 31, 2021?
Multiple Choice
a. $98,400.
b. $56,000.
c. $104,000.
d. $97,000.
e. $50,400.
4. Compute the noncontrolling interest in the net income of Demers at December 31, 2019.
Multiple Choice
a. $20,000.
b. $12,000.
c. $18,600.
d. $10,600.
e. $14,400.
Answer:
The correct answer is
B ,A , A ,C
Explanation:
1_ 100,000×80%=80,000
Excess FV Annual Amortization 7,000×80%=5,600
80,000_5,600=74,400
_________________________________
2_120,000×80%=96,000
Excess FV Annual Amortization 7,000×80%=5,600
96,000_5,600 =90,400
________________________________
3_130,000×80%=104,000
Excess FV Annual Amortization 7,000×80= 5,600
104,000_5,600=98,400
______________________________
4_100,000×20%=20,000
Excess FV Annual Amortization 7,000×20%=1,400
20,000_1,400=18,600
GOOD LUCK ❤
Assume the partial equity method is applied.
The amount of income that Pell should record as income from Demers for the year ended December 31, 2019 is: b. $74,400.The amount of income that Pell should record as income from Demers for the year ended December 31, 2020 is: a. $90,400.The amount of income that Pell should record as income from Demers for the year ended December 31, 2021 is: a. $98,400.The noncontrolling interest in the net income of Demers at December 31, 2019 is: c. $18,600.1. Income for 2019:
2019 Income= Net income for 2019 -Excess FV Annual Amortization
2019 Income=($100,000 × .80) - [($30,000+$40,000÷10)× .80]
2019 Income=($100,000 × .80) - [($70,000÷10)× .80]
2019 Income=($100,000 × .80) - ($7,000 × .80)]
2019 Income= $74,400
2. Income for 2020:
2020 Income= Net income for 2020 -Excess FV Annual Amortization
2020 Income=($120,000 × .80) - [($30,000+$40,000÷10)× .80]
2020 Income=($120,000 × .80) - [($70,000÷10)× .80]
2020 Income=($120,000 × .80) - ($7,000 × .80)]
2020 Income= $90,400
3. Income for 2021:
2021 Income=Net income for 2020 -Excess FV Annual Amortization
2021 Income=($130,000 × .80) - [($30,000+$40,000÷10)× .80]
2021 Income=($130,000 × .80) - [($70,000÷10)× .80]
2021 Income=($130,000 × .80) - ($7,000 × .80)]
2021 Income= $98,400
4. 2019 noncontrolling interest in the net income
2019 Noncontrolling Interest in Net income=Net income for 2019-Excess FV Annual Amortization
2019 Noncontrolling Interest in Net income=[$100,000×(100%-80%]- [($30,000+$40,000÷10)×(100%-80%]
2019 Noncontrolling Interest in Net income=($100,000 × .20) - [($70,000÷10)× .20]
2019 Noncontrolling Interest in Net income= ($100,000 × .20) - ($7,000 × .20)]
2019 Noncontrolling Interest in Net income = $18,600
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Bentels Co. desires a December 31 ending inventory of 2,840 units. Budgeted sales for December are 4,000 units. The November 30 inventory was 1,800 units. Budgeted purchases are:
A.5,040 units.
B. 1,240 units.
C. 6,840 units.
D. 4,000 units.
E. 5,800 units.
Answer:
Budgeted purchases Units
Budgeted sales 4,000
Ending inventory 2,840
Beginning inventory (1,800)
Budgeted purchases 5,040
The correct answer is A
Explanation:
Budgeted purchases equal budgeted sales plus ending inventory minus beginning inventory.
To determine the budgeted purchases, calculate the desired increase in inventory from November 30 to December 31 and add it to the budgeted sales for December.
Explanation:To determine the budgeted purchases, we need to calculate the desired increase in inventory from November 30 to December 31 and add it to the budgeted sales for December. The desired increase in inventory is 2,840 units - 1,800 units = 1,040 units. Therefore, the budgeted purchases are 4,000 units + 1,040 units = 5,040 units. Option A is the correct answer.
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Mervon Company has two operating departments: mixing and bottling. Mixing has 300 employees and occupies 23,485 square feet. Bottling has 200 employees and occupies 19,215 square feet.
Indirect factory costs for the current period follow: administrative, $220,000; and maintenance, $208,000.If the maintenance costs are allocated to operating departments based on square footage, determine the amount of maintenance costs allocated to each operating department.
Answer:
Mixing department = $208,000 × 0.55 = $114,400
Bottling department = $208,000 × 0.45 = $93,600
Explanation:
The computation of the allocation of the maintenance costs to each operating department is shown below:
Mixing department = 23,485 square feet
Bottling department = 19,215 square feet
Total square feet = 42,700 square feet
Now the weightage would be
Mixing department = Mixing department square feet ÷ Total square feet
= 23,485 ÷ 42,700
= 0.55
And, for bottling department would be
= Bottling department square feet ÷ Total square feet
= 19,215 ÷ 42,700
= 0.45
Now the allocation would be
Mixing department = $208,000 × 0.55 = $114,400
Bottling department = $208,000 × 0.45 = $93,600
Material participation standards for shareholders of Subchapter S corporations, who are individuals, include those who during the tax year __________. (A) participated in the activity for more than 80 hours during the tax year.(B) constituted at least one half of all the participation in the activity of all individuals ( including non-owners).(C) participated in all significant participation activities including activities outside the corporation for more than 200 hours).(D) participated in business activities for more than 100 hours during the tax year and the participation was not less than the activity of any other individual`s during the tax year.
Answer:
The correct answer is letter "D": participated in business activities for more than 100 hours during the tax year and the participation was not less than the activity of any other individual's during the tax year.
Explanation:
Material Participation Tests are principles the Internal Revenue Service (IRS) considers at the moment of qualifying an individual as being part of an income-producing activity. There are seven (7) tests taken into consideration by the IRS but only one requirement is necessary for qualification. Among them, test three (3) states that an individual qualifies if that person was involved for more than 100 hours and not less than any other individual in the firm.
Which of the following fringe benefits are nontaxable fringe benefits for the recipient?aEmployer-paid health insurancebEmployer-paid premiums on a $25,000 group-term life insurance policycA below-market loan provided to an employee who needed an advance on his paydSeason tickets for the local NFL teameThe cost of meals and lodging that is for the convenience of the employer
Answer:
(a) Employer-paid health insurance
Explanation:
Employer paid health insurance premiums are non taxable. According to standard practices, health insurance are not taxed.
For each of the following statements, draw a diagram that illustrates the likely effect on the market for eggs. Indicate in each case the impact on equilibrium price and equilibrium quantity a. The surgeon general warns that high-cholesterol foods cause heart attacks. b. The price of bacon, a complementary product, decreases. c. The price of chicken feed increases. d. Caesar salads become trendy at dinner parties. (The dressing is made with raw eggs.) e. A technological innovation reduces egg breakage during packing.
Answer:
Please find the diagrams in the attached images
Explanation:
A) If a surgeon warns that high-cholesterol foods cause heart attacks, the demand for eggs would fall because eggs are high in cholesterol. The fall in demand would shift the demand curve to the left , price and quantity would fall.
B. Complementary goods are goods consumed together. If the price of a complementary good falls, the demand for the other good increases. If the price of bacon falls, the demand for eggs would increase. The demand curve would shift to the right, the price and quantity would increase.
C. If the price of chicken feed increases, the cost of producing eggs increases and the quantity supplied falls. The supply curve shifts to the left, prices rise and quantity falls.
D. If Caesar salad becomes more trendy, the demand for eggs increases. The demand curve shifts to the right, price and quantity increases.
E. Technological innovation would increase the quantity supplied. The supply curve would shift to the right, price falls and quantity increases.
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1. High-cholesterol food has an adverse effect on health, such that it can lead to attacks and stroke. The surgeon warns that food with high cholesterol leads to heart attack, then the demands for eggs will be reduced. The equilibrium curve will be shifted towards the left due to less demand and a decrease in the price.
2. The fall in the complementary goods decreases, then the demand for other goods increases. The bacon, here is a complementary good. The demand for bacon if falls, the price of eggs will be increased. The demand curve will shift towards the right due to an increase in the price.
3. The demand and supply are dependent on each other, such that if the rate of chicken feed increases, then the supply of produced eggs decreases. The demand curve will be tilted towards the left as the price increase and supply decreases.
4. The ceaser salad includes eggs. If the ceaser trend is popular in people then the demand for eggs will be increased. The demand curve will be shifted to the right.
5. The innovation in technology will lead to an increase in the supply. The supply curve will shift to the right due to a decrease in the price and an increase in quantity.
Find the graphs in the attachment below.
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Vietnam and Ecuador both produce shrimp and wheat. Vietnam can produce 80 thousand pounds of shrimp or 40 thousand bushels of wheat in a year. Ecuador can produce 60 thousand pounds of shrimp or 20 thousand bushels of wheat in a year. Ecuador’s opportunity cost of producing one bushel of wheat is equal to pounds of shrimp. Vietnam’s opportunity cost of producing one bushel of wheat is equal to pounds of shrimp. The two countries decide to specialize and trade with each other. The country that produces wheat will sell one bushel of wheat for no less than pounds of shrimp. The other country will pay no more than pounds of shrimp for the one bushel of wheat. Enter whole numbers.
Final answer:
The opportunity cost of producing one bushel of wheat for Vietnam is 2 pounds of shrimp, and for Ecuador, it is 3 pounds of shrimp. Vietnam should specialize in wheat and Ecuador in shrimp based on comparative advantage. The trade exchange rate should be between 2 and 3 pounds of shrimp per bushel of wheat.
Explanation:
The concept being discussed is related to opportunity cost and comparative advantage in the realm of international trade. Opportunity cost is defined as the cost of not producing the next best alternative. For example, when Vietnam produces 40 thousand bushels of wheat, it foregoes the production of 80 thousand pounds of shrimp; therefore, the opportunity cost of producing one bushel of wheat in Vietnam is 2 pounds of shrimp. Similarly, for Ecuador, the opportunity to produce 20 thousand bushels of wheat instead of 60 thousand pounds of shrimp suggests their opportunity cost of producing one bushel of wheat is 3 pounds of shrimp.
When it comes to specialization, a country should specialize in the production of goods for which it has a lower opportunity cost. In the given context, Vietnam has a lower opportunity cost in producing wheat (2 pounds of shrimp) compared to Ecuador (3 pounds of shrimp). On the basis of comparative advantage, Vietnam should specialize in producing wheat and Ecuador should specialize in producing shrimp. The exchange rate for trade between the two countries should be set such that it is between their respective opportunity costs, i.e., between 2 and 3 pounds of shrimp per bushel of wheat.
In scenarios like that of the US and Brazil, with Brazil having a lower opportunity cost in producing sugar cane and the US in wheat, each country would benefit by specializing and trading based on their respective comparative advantages.
Consider the following events:25,000 shares of preferred stock, cumulative, 5%, $10 par was issued for $15 a share.The annual cash dividend was declared and paid to the above preferred stock.The company purchased 12,000 shares of common stock at $17 per share to be held as Treasury stock.Interest of $8,000 was paid to bondholders.Bonds Payable with a par value of $100,000 were retired at $108,000.Compute the net cash flow from financing activities (parentheses indicate an outflow):A) $ 58,500B) $(71,500)C) $ 50,500D) $ 45,500
Answer
The answer and procedures of the exercise are attached in the following archives.
Step-by-step explanation:
You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.
Finishing Touches has two classes of stock authorized: 9%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2021, its first year of operations: January 2 Issues 100,000 shares of common stock for $29 per share. February 6 Issues 2,400 shares of 9% preferred stock for $11 per share. September 10 Purchases 11,000 shares of its own common stock for $34 per share. December 15 Resells 5,500 shares of treasury stock at $39 per share. In its first year of operations, Finishing Touches has net income of $154,000 and pays dividends at the end of the year of $94,500 ($1 per share) on all common shares outstanding and $2,160 on all preferred shares outstanding.
Required:
Prepare the stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021.
The stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021 includes common stock, preferred stock, treasury stock, and retained earnings.
Explanation:The stockholders' equity section of the balance sheet for Finishing Touches as of December 31, 2021 would be presented as follows:
Common Stock
100,000 shares issued at $29 per share = $2,900,000
Preferred Stock
2,400 shares issued at $11 per share = $26,400
Treasury Stock
11,000 shares purchased at $34 per share = ($374,000) 5,500 shares resold at $39 per share = $214,500
Retained Earnings
Net income of $154,000 Dividends paid of $94,500
Total Stockholders' Equity = $2,970,400
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A firm is evaluating two independent projects utilizing the internal rate of return technique. Project X has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000. Project Z has a initial investment of $120,000 and cash inflows at the end of each of the next four years of $40,000.
The firm should
A) accept both if the cost of capital is at most 15 percent.
B) accept only Z if the cost of capital is at most 15 percent.
C) accept only X if the cost of capital is at most 15 percent.
D) none of the above
Answer:
If cost of capital is 15%
PROJECT X
Year Cashflow DF@15% PV
0 (80,000) 1 (80,000)
1-5 25,000 3.3522 83,805
NPV 3,805
PROJECT Z
Year Cashflow DF@15% PV
0 (120,000) 1 (120,000)
1-4 40,000 2.8550 114,200
NPV (5,800)
Accept project X if the cost of capital is at most 15%
The correct answer is C
Explanation:
In this case, the net present value of each project will be computed at 15% cost of capital and the project with positive net present value will be accepted.
A company wishes to hedge its exposure to a new fuel whose price changes have a 0.6 correlation with gasoline futures price changes. The company will lose $1 million for each 1 cent increase in the price per gallon of the new fuel over the next three months. The new fuel's price change has a standard deviation that is 50% greater than price changes in gasoline futures prices. If gasoline futures are used to hedge the exposure what should the hedge ratio be? What is the company's exposure measured in gallons of the new fuel? What position measured in gallons should the company take in gasoline futures? How many gasoline futures contracts should be traded? Each contract is on 42,000 gallons.
Answer:
0.9; 100 million; 90 million; 2,143
Explanation:
The new fuel's price change has a standard deviation that is 50% greater than price changes in gasoline futures prices.
So, if standard deviation of future prices is taken as '1' then for spot price it will be 50% higher, i.e 1.5
The hedge ratio:
= Correlation × (standard deviation of spot price ÷ Standard deviation of future prices)
= 0.6 × (1.5 ÷ 1)
= 0.9
The company has an exposure of 100 million gallons of the new fuel.
Gallons in future gasoline:
= Hedge ratio × 100 million gallons of the new fuel
= 0.9 × 100
= 90 million
Each contract is on 42,000 gallons, then
Number of gasoline futures contracts should be traded:
= 90,000,000 ÷ 42,000
= 2,142.9 or 2,143
Final answer:
The hedge ratio is 0.9, and the company has an exposure of 100 million gallons. The company should take a position of approximately 90 million gallons in gasoline futures, which corresponds to about 2143 contracts.
Explanation:
The hedge ratio can be calculated using the formula Hedge Ratio = Correlation Coefficient * (Standard Deviation of the Asset's Price Changes / Standard Deviation of the Futures Price Changes). Given that the correlation between the new fuel's price changes and gasoline futures price changes is 0.6 and the standard deviation of the new fuel's price changes is 50% greater than that of gasoline futures, the hedge ratio is 0.6 * (1 + 0.5) = 0.9.
The company's exposure measured in gallons is the amount it stands to lose for a 1 cent increase in the price per gallon of the new fuel. As it loses $1 million for each 1 cent increase, and each gallon increments by 1 cent, the exposure is $1 million / ($0.01/gallon) = 100 million gallons.
Given this exposure, the company should take a position in gasoline futures that is the product of the exposure and the hedge ratio: 100 million gallons * 0.9 = 90 million gallons. To find out the number of gasoline futures contracts to be traded, we divide the gallons hedged by the size of one contract: 90 million gallons / 42,000 gallons per contract ≈ 2143 contracts. Therefore, the company should trade approximately 2143 gasoline futures contracts to hedge its exposure.
Compute the dollar change and percent change for each account title, and select the answer choice from the drop-down list. Use year 1 as the base year. Accounts Payable balance on Year 1 is $75,000 and on Year 2 is $65,000. Bonds Payable balance on Year 1 is $225,000 and on Year 2 is $220,000. Common Stock balance on Year 1 is $300,000 and on Year 2 is $310,000. Retained Earnings balance on Year 1 is $100,000 and on Year 2 is $145,000. Total Stockholder’s Equity balance on Year 1 is $400,000 and on Year 2 is $455,000.
Answer:
See Below.
Explanation:
We calculate the changes as follows,
Accounts payable
Year 1 = 75,000
Year 2 = 65,000
$ Change = $-10,000
% Change = -10000/75000 = -13.3%
Bonds Payable
Year 1 = 225,000
Year 2 = 220,000
$ Change = $-5,000
% Change = -5000/ 225,000 = -2.22%
Common Stock
Year 1 = 300,000
Year 2 = 310,000
$ Change = $10,000
% Change = 10000/300000 = 3.33%
Retained Earnings
Year 1 = 100,000
Year 2 = 145,000
$ Change = $45,000
% Change = 45,000/ 100,000 = 45%
Total Stockholders' Equity
Year 1 = 400,000
Year 2 = 455,000
$ Change = $55,000
% Change = 55,000/400,000 = 13.75%
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Goods a company acquires to use in making products are called:
Select one:
a. Cost of goods sold.
b. Raw materials inventory.
c. Finished goods inventory.
d. Work in Process inventory.
e. Conversion costs.
Answer:
b. Raw materials inventory.
Explanation:
There are basically three cycles to make a product ready to sale
1. Raw material
2. Work in process
3. Finished goods
The raw material is the part of the product. In the work in process, the products parts are in process to combine all the parts of the products. And, in the finished goods cycle, after processing the product, the product is finished and then the product is ready to sale.
The costs of goods sold and the conversion cost are the cost which are related to the product