Answer:
Ellajane Corporation - Journal Entries
Date Particulars Debit Credit
1-Mar Treasury Stock $35,000
To Cash $35,000
(Being 2500 shares of treasury stock purchased at $14 per share)
10-Apr Cash A/c (1250*$18) $22,500
To Treasury Stock (1250*14) $17,500
To Additional Paid in Capital $5,000
(Being 1250 shares of treasury stock sold at $18 per share)
12-Jun Cash A/c (1250*12) $15,000
Additional Paid in Capital A/c $2,500
To Treasury Stock (1250*14) $17,500
(Being 1250 shares of treasury stock sold at $12 per share)
Assume that Canada imports more goods and services than it exports. Which of the following is true of the Canadian balance of payments accounts?
(A) The current account balance must be negative.
(B) The current account balance must be positive
(C) The trade balance must be negative.
(D) The financial account (formerly called capital account) balance must be negative
(E) The financial account (formerly called capital account) balance must be positive
Answer:
(C) The trade balance must be negative.
Explanation:
The Balance of trade refers to the net amount payable or receivable
In the case when the net amount is receivable so the balance of trade comes in positive and when the net amount payable is high than the balance of trade is negative.
Now
When the country exports greater than imports so it is a positive balance of Trade and on the other hand When the country imports greater than exports then the balance of trade is negative.
The following information describes production activities of Mercer Manufacturing for the year
Actual direct materials used 33,000 lbs. at $5.90 per lb
Actual direct labor used 10,700 hours for a total of $221,490
Actual units produced 63,000
Budgeted standards for each unit produced e 0.50 pounds of direct material at $5.85 per pound and 10 minutes of direct labor at $21.70 per hour
AQ = Actual Quantity
SQ Standard Quantity
AP Actual Price
SP = Standard Price
AH = Actual Hours
SH = Standard Hours AR Actual Rate
SR = Standard Rate
(1) Compute the direct materials price and quantity variances
(2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable
Answer:
See below
Explanation:
1a. Direct material price variance
= (Standard price - Actual price) × Actual quantity
= ( $5.85 - $5.90) × 33,000
= $1,650 unfavorable
1.b Direct materials quantity variance
= (Standard quantity - Actual quantity) × Standard price
= (63,000 × 0.5 - 33,000) × $5.85
= $8,775 unfavourable
2.a Direct labor rate variance
= (Standard rate - Actual rate) × Actual quantity
= ($21.70 - $20.7) × 10,700
= $10,700 favorable
2.b Direct labor efficiency variance
= (Standard quantity - Actual quantity) × Standard rate)
= [(10/60 × 63,000) - 10,700] × $21.7
= (10,500 - 10,700) × $21.7
= $4,340 unfavorable
Which of the following is not a way of creating agency in California?
Answer:
Note that in California, there are THREE ways to create agency: by agreement, by ratification, and by estoppel.
Explanation:
1. Written or expressed - An oral or written contract in which the parties state the contract's terms and express their intentions in words. We agree orally to the terms of our agency relationship, wherein you will hire me to market your property or represent you as a buyer's agent.
2. Implied - A contract under which the agreement of the parties is demonstrated by their acts and conduct. Example: "I'll help you buy a house; so don't work with anyone else because I will be your agent. Let's go look at some houses today."
3. Ostensible Agency - An actual agency relationship that arises by the actions of the parties rather than by express agreement. For example, the owner of a property knows a broker is showing the owner's vacant lot to prospective buyers without authority to do so. Unless the owner takes steps to stop such unauthorized showings, the law considers that third parties have a just cause to believe the broker to be the "owner's broker." This situation is called an ostensible agency because on the surface an agency appears to exist. Once this type of agency is created, the owner is prevented by estoppel* from denying its existence.
*Estoppel - A legal doctrine by which a person is prevented from asserting rights or facts that are inconsistent with a previous position or representation made by act, conduct, or silence.
4. Ratification - A method of creating an agency relationship in which the principal (seller or buyer) accepts the conduct of someone who acted without prior authorization as the principal's agent. Example: A licensee who shows a property without the owner's prior approval, and then the owner agrees to work with the agent to sell the property.
Note that in California, there are THREE ways to create agency: by agreement, by ratification, and by estoppel.
A copy machine is available 18 hours a day. On a typical day, the machine needs to process 320 jobs. Each job takes about 1.5 minutes on the machine, 0.5 minute of which is processing time and 1 minute is setup time (logging in, defining the job). About 25% of the jobs need to be reworked, in which the set?up time and the processing time have to be repeated once. In the remaining time, the equipment is idle. You would need to show steps and use 2 decimals in calculations.
(a) Draw a tree diagram to show the breakdown of equipment time.
(b) Define and calculate total non value added time in minutes.
(c) Define and calculate total value added time in minutes.
(d) Calculate total waste time in minutes. Give a detailed breakdown of waste time.
(e) What is the OEE of the equipment? (percentage, 2 decimals, i.e. 23.67%)
Answer:
(b)
Total available time = 18x60 =1080 min.
Total processing time = 320x0.5 = 160 min
Total set up time = 320x1 -320 min.
Total rework time = ( 1+0.5) =120 min.
Total Non value added time = set up time + rework time 320+120 = 440 min.
(c) Total value added time = processing time = 160 min.
(d) Total waste time = set up time + rework time + Idle time 320+120+ 480 = 920 mn.
(e) OEE = processing time / time available = 160/1080 = 0.1481 = 14.81%
MatchPoint Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for March for the two rackets is as follows:
Junior Pro Striker
Production budget 8,100 units 19,500 units
Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:
Forming Department Assembly Department
Junior 0.25 hour per unit 0.50 hour per unit
Pro Striker 0.30 hour per unit 0.70 hour per unit
The direct labor rate for each department is as follows:
Forming Department $17.00 per hour
Assembly Department $9.00 per hour
Required:
Prepare the direct labor cost budget for March.
Answer:
See below
Explanation:
The preparation of direct labor cost budget for March is seen below;
Particulars Foaming department Assembly department
Production 8,100 units 19,500 units
Hours required
Junior 2,025 4,050
Hours required
Pro 5,850 13,650
Total hours
Department Wise (A) 7,875 17,700
Total Hourly rate (B) $17 $19
Total direct labor cost (A × B) $133,875 $336,300
••Workings
For Junior, it would be :
Foaming
= 0.25 hour per unit × 8,100 units
= 2,025
Assembly
= 0.50 hour per unit × 8,100 units
= 4,050
For Pro, it would be:
Foaming
= 0.30 hour per unit × 19,500 units
= 5,850
Assembly
= 0.70 hour per unit × 19,500 units
= 13,650
Which of the following statements about using dramatics in a sales presentation is most likely true? Using dramatic demonstrations fails to set a salesperson apart from the majority of other salespeople. A salesperson's own uncertainty about the use of dramatics increases the positive impact on the prospect. A theatrical movie showing the history of the company is an example of dramatization. Dramatics should be incorporated into all sales presentations due to their success rate. Television commercials are a source of ideas for dramatizations.
Answer:
Television commercials are a source of ideas for dramatizations.
Explanation:
Marketing can be defined as the process of developing promotional techniques and sales strategies by a firm, so as to enhance the availability of goods and services to meet the needs of the end users or consumers through advertising and market research.
Basically, marketing comprises of all the activities such as, identifying, anticipating set of medium and processes for creating, promoting, delivering, and exchanging goods and services that has value for customers. It typically, involves understanding customer needs, building and maintaining healthy relationships with them in order to scale up your business.
A sales presentation can be defined as series of talk given by a salesperson with the attempt to persuade someone or a potential customer to buy a particular product, by giving information it. Some salespersons resort to the use of dramatics so as to initiate and close the sale of a particular product by engaging in series of theatrical actions.
Hence, the statement about using dramatics in a sales presentation which is most likely true is that, television commercials are a source of ideas for dramatizations because various actions are performed with the intent to promote the purchase of a product.
During the current year, the company purchased equipment for $212,000 on October 1. It is estimated the equipment will have a useful life of 8 years and a salvage value of $12,000. Estimated production is 40,000 units and estimated working hours are 20,000. During the current year, the company uses the equipment for 525 hours and the equipment produced 1,000 unites. The company uses December 31 as its fiscal year end.
Part 1: For the current year, compute depreciation expense using the straight-line method.
Part 2: For the current year, compute depreciation expense using the activity method (units of output).
Part 3: For the current year, compute depreciation expense using the activity method (working hours).
Answer:
$6250
$5000
$5250
Explanation:
Straight line depreciation expense = (Cost of asset - Salvage value) / useful life
($212,000 - $12,000) / 8 = $25,000
The machine was used for only 3 months in the fiscal year. Thus, the depreciation expense = $25,000 x (3/12) = $6250
Activity method based on output = (output produced that year / total output of the machine) x (Cost of asset - Salvage value)
(1000 / 40,000) x ($212,000 - $12,000) = $5000
Activity method based on hours worked = (hours worked that year / total hours of the machine) x (Cost of asset - Salvage value)
($212,000 - $12,000) x (525 / 20,0000) = $5250
Brix, Inc., prepares frozen food for fast-food restaurants. It has two workstations, cooking and assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the speed of the workers. Assembly normally waits on food from cooking. The current production is 3,000 dozen units per month. Because the demand has increased in recent months, management is considering adding another cooking station or else having the cooks in the cooking station start to work earlier. The monthly cost of operating the cooking station one more hour each day is $2,500. The cost of adding another cooking station would add an average of $11 per hour. The current operating hours total eight hours a day, 22 days a month. The contribution margin of the finished products is currently $8 per dozen. Either the extra hour or the new cooking station would increase production by 20 dozen a day. Assuming the company carries no inventory. Required: a. What is the total production per month if the change is made
Answer:
Brix, Inc.The total production per month if the change is made is:
3,440 dozen units.
Explanation:
a) Data and Calculations:
Current production per month = 3,000 dozen units
Alternatives Cooking Station Extra Hour of Labor
Monthly cost $2,500
Average cost per hour $11
Current operating hours 8/day
Working days per month 22
Total monthly cost $1,936 ($11 * 8 * 22) $2,500
Add a new cooking station is cheaper by $564 per month since they each produce the same output per day.
Units added by extra hour or the new cooking station = 20 dozen a day
There are 22 days in a month, so the increase monthly = 440 (22 * 20)
Total monthly production will become 3,440 (3,000 + 440)
Economists sometimes describe the balance of trade as the balance of payments, because:___________
a. they are mistaking the flow of goods with the flow of money
b. each category of the current account balance involves a corresponding flow of payments in the same direction
c. each category of the current account balance involves a corresponding flow of payments in the opposite direction
d. its financial capital outflows are equal to the inflows
Answer: b. each category of the current account balance involves a corresponding flow of payments in the same direction
Explanation:
For every purchase made or sales that sold, a corresponding payment needs to be made or received.
The balance of payment therefore allows for us to be able to figure out the amount that was traded because it would be the payment received less receives.
how have people responded to the pandemic in terms of successful managing event at this time?
Answer:
Find the explanation below.
Explanation:
The pandemic of 2019 which spread so fast in 2020 and caused the shut down of many business activities has been effectively managed and adapted to by many people. Given that the pandemic requires social distancing, regular handwashing, wearing of nose masks and some other hygienic practices aimed at quelling its effects, people have endeavored to avoid unnecessary social gatherings.
Business meetings, wedding events, and even the education of students are held virtually through video calling applications. This way events are still held while keeping to the rules guiding the pandemic.
'Teaching profession is an important profession of nation' Justify this statement.
Answer:
A teacher plays a role of a mentor as well as of a facilitator.
Explanation:
Teachers instill knowledge and skills in our youngsters of the nation. They are the nation builders. The state of teaching is stronger because teachers everywhere are leading from their classrooms and taking over new roles to enhance education for teenagers.
A teacher plays a role of a mentor as well as of a facilitator.
Norris Company has the following capital structure: Common stock, $1 par, 100,000 shares issued and outstanding. On October 1, 2020, the company declared a 5% common stock dividend when the market price of the common stock was $15 per share. The stock dividend will be distributed on October 15, 2020, to stockholders on record on October 10, 2020. Upon declaration of the stock dividend, Norris Company would record:
Answer: Debit to retained earnings of $75000
Explanation:
Based on the information given, the stock dividend will be:
= 100,000 shares x 5%
= 100000 × 0.05
= 5,000 shares.
Since the market price is $15 per share, then the retained earnings will be:
= $15 × 5000
= $75000
Stock dividend distributable will be:
= 5,000 x $1
= $5000
Paid in capital in excess of par = $75000 - $5000 = $70000
The journal entry will be:
Debit Retained earnings $75000
Credit Stock dividend distributable $5,000
Credit Paid in capital in excess of par $70000
Blight Financial has an investment in bonds issued by Searing Industries that are classified as trading securities. At December 31, Year 2, the Investment in Searing bonds account had a debit balance of $500,000, and the bonds were purchased at par so the $500,000 equals amortized cost. The Fair Value Adjustment account had a debit balance of $20,000. On December 31, Year 3, the amortized cost of those bonds has not changed, but the fair value of those bonds was $515,000. Which of the following will be included in the related journal entry dated December 31, Year 3?
a. Debit to Fair value adjustment for $5,000
b. Credit to Fair value adjustment for $5,000
c. Debit to Fair value adjustment for $25,000
d. Credit to Fair value adjustment for $25,000
Answer:
b. Credit to Fair value adjustment for $5,000
Explanation:
Particulars Amount
Beginning balance of fair value adjustment $20,000
Less: Unrealized gain on Dec 31, year 3 $15,000 ($515,000-$500,000)
Credit to Fair value adjustment $5,000
So, Credit to Fair value adjustment for $5,000 will be included in the related journal entry dated December 31, Year 3.
You are provided with the following information for Sandhill Co., effective as of its April 30, 2022, year-end.
Accounts payable $ 848
Accounts receivable 900
Accumulated depreciation—equipment 630
Cash 1,360
Common stock 16,300
Cost of goods sold 1,000
Depreciation expense 315
Dividends 310
Equipment 2,500
Goodwill 1,900
Income tax expense 175
Income taxes payable 135
Insurance expense 360
Interest expense 460
Inventory 950
Investment in land 15,000
Land 3,200
Mortgage payable (long-term) 4,500
Notes payable (short-term) 62
Prepaid insurance 70
Retained earnings (beginning) 1,700
Salaries and wages expense 850
Salaries and wages payable 275
Sales revenue 6,200
Stock investments (short-term) 1,300
Prepare an income statement for Sandhill Co. for the year ended April 30, 2022.
Prepare a retained earnings statement for Sandhill Co. for the year ended April 30, 2022. (List items that increase retained earnings first.)
Answer:
SANDHILL CO.
Income Statement
For the Year Ended April 30, 2022
Revenues
Sales revenue $6,200
Expenses
Cost of Goods Sold $1,000
Depreciation expense $315
Income tax expense $175
Insurance expense $360
Interest expense $460
Salaries & Wages expenses $850
Total Expenses $3,160
Net Income $3,040
SANDHILL CO.
Retained Earnings Statement
For the Year Ended April 30, 2022
Retained Earnings, May 1, 2021 $1,700
Add: Net Income $3,040 $4,740
Less: Dividends $310
Retained Earnings, April 30, 2022 $4,430
A review of the ledger of Wildhorse Co. at December 31, 2022, produces these data pertaining to the preparation of annual adjusting entries.
1. Prepaid Insurance $16,824. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2021, for $10,080. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2022, for $8,424. This policy has a term of 18 months.
2. Unearned Rent Revenue $314,240. The company began subleasing office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.
Date Term (in months) Monthly Rent Number of Leases
Nov.1 8 $5,380 5
Dec. 1 7 $8,120 4
3. Notes Payable $46,800. This balance consists of a note for 6 months at an annual interest rate of 7%, dated October 1.
4. Salaries and Wages Payable $0. There are 11 salaried employees. Salaries are paid every Friday for the current week.
5 employees receive a salary of $635 each per week, and 6 employees earn $ 765 each per week. Assume December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.
Required:
Prepare the adjusting entries at December 31, 2017.
Answer:
1. Debit Insurance expense for $8,976; and Credit Prepaid insurance for $8,976.
2. Debit Unearned revenue for $86,280; and Credit Rent revenue for $86,280.
3. Debit Interest expense for $819; and Credit Interest payable for $819.
4. Debit Salaries expense for $4,659; Credit for Salaries payable for $4,659.
Explanation:
Note: The correct date in the requirement is 2022 not 2017 as mistakenly stated.
The adjusting journal entries will look as follows:
Date Accounts Title & Explanation Debit ($) Credit ($)
Dec. 31 Insurance expense (w.1) 8,976
Prepaid insurance 8,976
(To record insurance expenses)
Dec. 31 Unearned revenue 86,280
Rent revenue (w.2) 86,280
(To record rent revenue.)
Dec. 31 Interest expense (w.3) 819
Interest payable 819
(To record interest on note payable.)
Dec. 31 Salaries expense (w.4) 4,659
Salaries payable 4,659
(To record salaries accrued.)
Workings:
w.1. Prepaid Insurance $16,824. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2021, for $10,080. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2022, for $8,424. This policy has a term of 18 months.
Expired insurance Policy B4564 adjustment = $10,080 / 3 = $3,360
Expired insurance Policy A2958 adjustment = ($8,424 /18 months) * 12 months = $5,616
Total insurance expense = Expired insurance Policy B4564 adjustment + Expired insurance Policy A2958 adjustment = $3,360 + $5,616 = $8,976
w.2. Unearned Rent Revenue $314,240. The company began subleasing office space in its new building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease.
Earned revenue = Monthly rent * Accrued month * Number of lease
Therefore, we have:
Total earned revenue = ($5,380 * 2 * 5) + ($8,120 * 1 * 4) = $86,280
w.3. Notes Payable $46,800. This balance consists of a note for 6 months at an annual interest rate of 7%, dated October 1.
Interest expense on note payable = Principal * Rate * Time = $46,800 * 7% * (3 / 12) = $819
w.4. Salaries and Wages Payable $0. There are 11 salaried employees. Salaries are paid every Friday for the current week. 5 employees receive a salary of $635 each per week, and 6 employees earn $ 765 each per week. Assume December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December.
Total salaries accrued = (5 employees * $635 each per week * 3/5 days) + (6 employees * $765 each per week * 3/5 days) = $4,659
When you begin a new job, you might be assigned to a _____, who will provide much of the new employee training.
mentor
team leader
another new employee
manager
A building was constructed last year for Agro Co. for use as a production facility. Construction began on January 1 and was completed on December 31. The payments to the contractor were as follows.
Date Payment
1/1 $300,000
4/1 620,000
8/1 460,000
10/1 300,000
To finance construction of the building, a $750,000, 10% construction loan was taken out on January 1. The loan was repaid on December 31. The firm had two sources of general debt: $400,000 note payable, 9% annual interest, and $500,000 par value bonds, 7.5% annual interest.
Determine the amount of interest to be capitalized.
Answer:
Agro Co.
The amount of interest to be capitalized is:
= $92,850.
Explanation:
a) Data and Calculations:
Date Payment Weight Weighted Average
1/1 $300,000 12/12 $300,000
4/1 620,000 9/12 465,000
8/1 460,000 5/12 191,667
10/1 300,000 3/12 75,000
Weighted-average accumulated expenditure = $1,031,667
Sources debt:
$750,000 construction loan, 10% annual interest = $75,000
$400,000 note payable, 9% annual interest = 36,000
$500,000 par value bonds, 7.5% annual interest = 37,500
Total debt = $1,650,000 Total interest = $148,500
Weighted-average interest rate = $148,500/$1,650,000 * 100 = 9%
Interest to be capitalized = Weighted-average accumulated expenditure * Weighted-average interest rate
= $1,031,667 * 9%
= $92,850
An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.
Required:
a. How much profit will the airline earn if it sets the price of each ticket at $600?
b. How much additional profit can the airline earn by charging each customer their willingness to pay relative to charging a flat price of $600 per ticket?
Answer: it would be 100 business travlers who will pay 600$ for a ticket
Explanation: well if you do the math 600×100=60,00 and that would pay for the airline expenses and extra the other option wouldnt be enough because it would only add up to 15,000 300×50=15,00 so it would be enough
Stella is a volunteer at her church during bingo night. At the end of the night, it is her responsibility to take the evening's profits and drop them in the night deposit box at the local bank. She is given the leather and canvas case filled with money and she leaves for the bank. On the way there, she decides to keep the money and drives to another state. What crime has she committed?
A) embezzlement
B) burglary
C) extortion
D) larceny
Stella have taken the money and driven to another state which was supposed to be deposited at the local bank. The crime that Stella have committed is termed as larceny. Thus, the correct answer is option D.
What is larceny?Larceny is a crime that involves the illegal taking or theft of another person's or business's personal property. It was an offence under English common law, and it became an offence in jurisdictions that incorporated English common law into their own law (also statutory law), where it is still in effect in many cases.
Larceny is defined as the unlawful taking of personal property with the intent to permanently deprive the rightful owner of it.
Stella, being the volunteer at her church during bingo night had the responsibility of taking the evening's profits and drop them in the night deposit box at the local bank. Instead she decides to keep the money and drives to another state thus committing larceny.
Thus, larceny is the crime that Stella has committed.
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In divisional income statements prepared for Lemons Company, the Payroll Department costs are allocated to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are allocated on the basis of the number of purchase requisitions. The Payroll Department had costs of $62,928, and the Purchasing Department had expenses of $29,480 The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records:
Residential Commercial Government Contract
Sales $2,000,000 $3,250,000 $2,900,000
Weekly payroll (52 weeks per year) 400 250 150
Monthly payroll 80 30 10
Number of purchase requisitions per year 7,500 3,000 2,000
Required:
a. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division.
b. Using the activity base information in (a), determine the annual amount of payroll and purchasing costs charged back to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services.
c. Residential's service department charge is _______ than the other two divisions because Residential is a user of service department services. Residential has many employees on a weekly payroll, which translates into a ________ number of payroll transactions.
Answer:
Lemons Company
a. Total amount of payroll checks = 920
amount of purchase requisitions = 12,500
b-a Residential Commercial Government Total
Payroll $32,832 $19,152 $10,944 $62,928
b-b Purchasing
Costs $17,688 $4,717 $7,075 $29,480
c. Residential's service department charge is __higher__ than the other two divisions because Residential is a user of service department services. Residential has many employees on a weekly payroll, which translates into a __higher__ number of payroll transactions.
Explanation:
a) Data and Calculations:
Cost of the Payroll Department = $62,928
Cost of the Purchasing Department = $29,480
Residential Commercial Government Total
Contract
Sales $2,000,000 $3,250,000 $2,900,000 $8,150,000
Weekly payroll
(52 weeks per year) 400 250 150 800
Monthly payroll 80 30 10 120
Total 480 280 160 920
Number of purchase
requisitions per year 7,500 3,000 2,000 12,500
a. Total amount of payroll checks = 920 (800 + 120)
Total amount of purchase requisitions = 12,500
b-a Residential Commercial Government Total
Payroll $32,832 $19,152 $10,944 $62,928
(480/920 * $62,928) (280/920 * $62,928) (160/920 * $62,928)
b-b Purchasing
Costs $17,688 $4,717 $7,075 $29,480
(7,500/12,500 * $29,480) (2,000/12,500 * $29,480) (3,000/12,500 * $29,480)
Total $50,520 $23,869 $18,019 $92,408
Percentage 54.7% 25.8% 19.5% 100%
Mills Corporation acquired as a long-term investment $300 million of 6% bonds, dated July 1, on July 1, 2018. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $350 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $325 million.
Required:
1. & 2. Prepare the journal entry to record Mills’ investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate.
3. At what amount will Mills report its investment in the December 31, 2018, balance sheet?
4. Suppose Moody’s bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2019, for $360 million. Prepare the journal entries to record the sale.
Answer:Please see explanation for answers
Explanation:
1. Journal to record the investment in bonds
Date Account title and explanation Debit Credit
July, 1 2018 Investment in Bonds $300,000,000
To Premium on Bond Investment $50,000,000
To Cash $350,000,000
2. To record interest on Bonds
Date Account title and explanation Debit Credit
December 31,2018 Cash $9,000,000
(300,000,000 x 6% x 6/12)
Interest Revenue
($350,000,000 × 4% x 6/12) $7,000,000
To Premium on bonds $2,000,000
3. The Amount to be reported in balance sheet is
Investment in Bonds $300,000,000
+Premium on bonds
(Original Premium $50,000,000 -Amortization (2,000,000) =48,000,000
Amount to be reported in Balance sheet= $348,000,000
4. Date Account title and explanation Debit Credit
January 2, 2019 Cash $360,000,000
To gain on sale $12,00,000 ($348,000,000 - $360,000,000)
To Investment in bonds $300,000,000
To Premium on bonds $48,000,000
[The following information applies to the questions below.]
Identify the corresponding budget(s) from which dollar amounts are transferred directly in constructing each of the following:
1. Budgeted income statement.
2. Budgeted balance sheet.
3. Cash flow budget.
4. Cost of goods sold budget.
5. Production budget.
a. Direct materials budget
b. Cost of goods sold budget
c. Production budget
d. Payables budget
e. Sales budget
f. Budgeted income statement
Answer:
The corresponding budgets in column B from which dollar amounts are transferred directly in constructing the budgets listed in Column A are matched in the explanation below
Explanation:
1.) Budgeted Income Statement
E.) Sales Budget
2.) Budgeted Balance Sheet
D.) Payables Budget
3.) Cash Flow Budget
A.) Direct Materials Budget
4.) Cost of Goods Sold Budget
B.) Cost of Goods Sold Budget
5.) Production Budget
C.) Production Budget
On June 30, 2020, Lynch Co. declared and issued a 15 percent stock dividend. Prior to this dividend, Lynch had 50,000 shares of $10 par value common stock issued and outstanding. The market value of Lynch Co.'s common stock on June 30, 2020, was $24 per share. As a result of this stock dividend, by what amount would Lynch's total stockholders' equity increase (decrease)? Group of answer choices
Answer:
$75,000 decrease
Explanation:
The total stockholders' equity decreases by the same amount of dividend distributed. This is so because distributions are made out of the Retained earnings which is a reserve set aside for stockholders and constitutes stockholders' equity.
So we have to calculate the value of dividend distributed. Dividends are calculated using book values instead of market value of stocks as follows :
Dividend = 50,000 x $10 x 15 % = $75,000
The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system. April 30 May 31 Inventories Raw materials $ 26,000 $ 56,000 Work in process 9,700 19,800 Finished goods 53,000 34,600 Activities and information for May Raw materials purchases (paid with cash) 175,000 Factory payroll (paid with cash) 250,000 Factory overhead Indirect materials 7,000 Indirect labor 57,500 Other overhead costs 95,500 Sales (received in cash) 1,600,000 Predetermined overhead rate based on direct labor cost 55 % Raw materials purchases for cash. Direct materials usage. Indirect materials usage. Prepare journal entries for the above transactions for the month of May.
Answer:
1. Dr Raw materials inventory $175,000
Cr Cash $175,000
2. Dr Goods in process inventory $138,000
Cr Raw materials inventory $138,000
3. Dr Factory overhead $7,000
Cr Raw materials inventory $7,000
Explanation:
Preparation of journal entries transactions for the month of May.
1. Dr Raw materials inventory $175,000
Cr Cash $175,000
2. Dr Goods in process inventory $138,000
Cr Raw materials inventory $138,000
($26,000+$175,000-$7,000-$56,000)
3. Dr Factory overhead $7,000
Cr Raw materials inventory $7,000
Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 119,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply: September 15$0.61 September 30 0.65 October 15 0.60 Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements.
Answer:
Exchange rate on September 15: 1 Crown = $0.61; 119,000 Crown = (119,000*$0.61) = $72,590.
September 30 = (119,000*0.65) = $77,350.
October 15 = (119,000*$0.60) = $71,400.
JOURNAL ENTRY
Date Account Debit Credit
15-Sep Account receivable $72,590
Sales $72,590
(Sale to a foreign customer for 119,000 crown Exchange rate = $0.61)
30-Sep Account receivable $4,760
Foreign currency exchange gain $4,760
($77,350-$72,590)
15-Oct Foreign currency exchange loss $5,950
Account receivable $5,950
($71,400-$77,350)
Cash $77,350
Accounts Receivable $77,350
Karim Corp. requires a minimum $10,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $10,400, and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow.
July August September
Cash receipts $26,000 $34,000 $42,000
Cash payments 31,000 32,000 34,000
Required:
Prepare a cash budget for July, August, and September.
Answer:
July $10,000
August $10,000
September $15,328
Explanation:
Preparation of the cash budget for July, August, and September.
KARIM CORP
Cash Budgetfor July, August & September
July August September
Beginning Cash Balance
$10,400 $ 10,000 $10,000
Add Cash receipts $26,000 $34,000 $42,000
Total Cash Available$36,400 $ 44,000 $52,000
Cash payments $31,000 $32,000 $34,000
Interest Expense $0 $46 $26.46
Preliminary cash balance $5,400 $ 11,954 $ 17,974
Additional loan (Loan Repayments)
$4,600 ($1,954) ($2,646)
Ending Cash Balance
$10,000 $10,000 $15,328
($5,400+$4,600=$10,000)
($ 11,954-$1,954=$10,000)
($17,974-$2,646=$15,328)
Calculation for Loan Balance
Loan Balance -Beginning of Month
$- $4,600 $2,646
Additional Loan (Loan Repayment)
$4,600 ($1,954) ($2,646)
Loan Balance End of Month $4,600 ($2,646) $0
Therefore the cash budget for July, August, and September are:
July $10,000
August $10,000
September $15,328
The following information is available for Sweet Acacia Industries for the year ended December 31, 2022. $38,400 Beginning cash balance Accounts payable increase 9,120 Depreciation expense 65,600 Accounts receivable decrease 7,680 Inventory decrease 4,960 Net income 91,520 Cash received for sale of land at book value 166,400 Cash dividends paid 60,800 Income taxes payable decrease 6,240 129,600 Cash used to purchase land 105,600 Cash used to redeem bonds 256,000 Cash received from issuing stock
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a -sign e.g. -15,000 or in parenthesis eg. (15,000).)
Answer:
Sweet Acacia Industries
Statement of Cash Flows
For the Year Ended December 31, 2022
Cash Flows from Operating Activities:
Net income $91520
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense 65600
Decrease in Accounts Receivable 7680
Decrease in inventory 4960
Increase in accounts payable 9120
Decrease in Income tax payable -6240 $81120
Net cash provided by operating activities $172,640
Cash Flows from Investing Activities:
Sale of Land 166400
Purchase of Land -129600
Net Cash Provided by Investing Activities $36,800
Cash Flows from Financing Activities:
Payment of Dividends -60800
Issuance of Stock 256000
Redemption of Bonds -105600
Net Cash provided by Financing Activities $89,600
Net Increase in Cash $299,040
Cash at Beginning of Period $38,400
Cash at End of Period $337,440
On July 31, 2017, Crane Company had a cash balance per books of $6,355.00. The statement from Dakota State Bank on that date showed a balance of $7,905.80. A comparison of the bank statement with the Cash account revealed the following facts.
1. The bank service charge for July was $19.00.
2. The bank collected $1,630.00 for Crane Company through electronic funds transfer.
3. The July 31 receipts of $1,309.30 were not included in the bank deposits for July. These receipts were deposited by the company in a night deposit vault on July 31.
4. Company check No. 2480 issued to L. Taylor, a creditor, for $394.00 that cleared the bank in July was incorrectly entered in the cash payments journal on July 10 for $349.00.
5. Checks outstanding on July 31 totaled $1,979.10.
6. On July 31, the bank statement showed an NSF charge of $685.00 for a check received by the company from W. Krueger, a customer, on account.
Question Completion:
Prepare a bank reconciliation statement as of July 31, 2017.
Answer:
Crane CompanyBank Reconciliation Statement as of July 31, 2017
Balance as per bank statement $7,905.80
Add Uncredited deposits 1,309.30
Less Checks outstanding 1,979.10
Balance as per adjusted cash book $7,236.00
Explanation:
a) Data and Analysis:
July 31, 2017:
Cash balance per books of $6,355.00
Bank statement balance = $7,905.80
Reconciling items:
1. Bank service charge$19.00
2. Direct EFT receipt $1,630.00
3. Uncredited deposits $1,309.30
4. Understated check No. 2480 $45
5. Checks outstanding $1,979.10
6. NSF charge of $685.00 (W. Krueger)
Cash Book Adjustment as of July 31, 2017
Balance as per cash book $6,355.00
add: Direct EFT receipt 1,630.00
less: Bank service charge 19.00
Understated check No. 2480 45.00
NSF charge 685.00
Adjusted Cash Book balance $7,236.00
Becker Company is preparing its cash budget for the upcoming month. The budgeted beginning cash balance is expected to be $70,000. Budgeted cash disbursements are $254,000, while budgeted cash receipts are $252,000. Becker Company wants to have an ending cash balance of $100,000. How much would Becker Company need to borrow to achieve its desired ending cash balance
Answer:
$32,000
Explanation:
Calculation to determine How much would Becker Company need to borrow to achieve its desired ending cash balance
Using this formula
Desired ending cash balance=[Ending cash balance-Budgeted beginning cash balance+
(Budgeted cash disbursements-budgeted cash receipts)]
Let plug in the formula
Desired ending cash balance=[$100,000-$70,000+($254,000-$252,000)]
Desired ending cash balance=$30,000+$2,000
Desired ending cash balance=$32,000
Therefore The amount that Becker Company need to borrow to achieve its desired ending cash balance is $32,000
Describe how each of the following will affect the demand for personal computers: (a) A rise in incomes (assuming computers are a normal good); (b) A lower expected price for computers; (c) Cheaper software; (d) Simpler-to-operate computers.
Answer and Explanation:
The impact of the demand in the following situations are
1. Since there is a rise in the income and we assume it is a normal good. So in the case of the normal goods it shows a direct relationship between the income and the demand that means if the income is increased so the demand also increased & vice versa
2. For The lower expected computer price, the demand would decrease as the people predict that the price could decline in future
3. For cheaper software, the demand is increased as the price is very less
4. In the case when the computer are simple to operate so it would increase the demand
A rise in income would lead to an increase in the demand for personal computers.
A lower than expected price for personal computers would lead to a rise in the quantity demanded for personal computers.
A cheaper software would lead to an increase in the demand for personal computers.
Simpler-to-operate computers would lead to an increase in the demand for personal computers.
A normal good is a good whose demand increases when income increases and decreases when income declines.
Only a change in the price of a good leads to a change in the quantity demanded. Other factors lead to a change in demand.
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