Answer:
Direct material price variance= $520 favorable
Explanation:
To calculate the direct material price variance, we need to use the following formula:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (2 - 1.9)*5,200
Direct material price variance= $520 favorable
Actual price= 9,880 / 5,200= $1.9
JDog Corporation owns stock in Oscar Inc. valued at $2,000,000 at the beginning of the year and $2,200,000 at year-end. Jdog received a $10,000 dividend from Oscar Inc. What temporary book-tax differences associated with its ownership in Oscar stock will Jdog report for the year in the following alternative scenarios (income difference only-ignore the dividends-received deduction)?
a. JDog owns 5 percent of the Oscar Inc. stock. Oscar's income for the year was $500,000.
b. JDog owns 40 percent of the Oscar Inc. stock. Oscar's income for the year was $500,000.
Answer:
a. The temporary book-tax differences associated with 5 percent ownership in Oscar stock which Jdog will report for the year is $0.
b. The temporary book-tax differences associated with 40 percent ownership in Oscar stock which Jdog will report for the year is $190,000.
Explanation:
a. JDog owns 5 percent of the Oscar Inc. stock. Oscar's income for the year was $500,000
The 5 percent ownership implies that JDog has to report $10,000 in book income, and also report $10,000 in gross income. Therefore, we have:
Temporary book difference = Amount to report in book income – Amount to report in gross income = $10,000 - $10,000 = $0
Therefore, the temporary book-tax differences associated with 5 percent ownership in Oscar stock which Jdog will report for the year is $0.
b. JDog owns 40 percent of the Oscar Inc. stock. Oscar's income for the year was $500,000.
The 40 percent ownership implies that:
Amount to report in book income = $40% * $500,000 = $200,000
Amount to report in gross income = $10,000
Temporary book difference = Amount to report in book income – Amount to report in gross income = $200,000 - $10,000 = $190,000
Therefore, the temporary book-tax differences associated with 40 percent ownership in Oscar stock which Jdog will report for the year is $190,000.
The standard cost of direct labor per unit is calculated by:_______
A. multiplying the standard quantity of direct labor by the standard price of direct labor.
B. multiplying the actual quantity of direct labor by the standard price of direct labor.
C. dividing the standard quantity of direct labor by the standard price of direct labor.
D. adding the standard quantity of direct labor to the standard price of direct labor.
Answer:
A. multiplying the standard quantity of direct labor by the standard price of direct labor.
Explanation:
Standard cost of direct labor = Standard quantity*Standard price. Standard cost of direct labor per hour are calculated and compared with the Actual cost of direct labor per hour and multiplied by Actual hours used to calculate direct labor rate variance.
So, option A (multiplying the standard quantity of direct labor by the standard price of direct labor) is correct.
1. Prepare general journal entries for the transactions.
Mitchell Parts Co. had the following plant asset transactions during the year:
1. Assets discarded or sold:
Jan. 1 Motor #12, which had a cost of $2,890 and accumulated depreciation of
$2,890, was discarded.
8 Motor #8, which had a cost of $4,440 and accumulated depreciation of
$4,020, was sold for $260.
14 Motor #16, which had a cost of $5,730 and accumulated depreciation of
$5,490, was sold for $470.
2. Assets exchanged or traded in:
Feb. 1 Motor #6, which had a cost of $5,860 and accumulated depreciation of
$4,590, was traded in for a new motor (#22) with a fair market value of
$6,800. The old motor and $5,300 in cash were given for the new motor.
9 Motor #9, which had a cost of $5,420 and accumulated depreciation of
$4,940, was traded in for a new motor (#23) with a fair market value of
$6,450. The old motor and $6,170 in cash were given for the new motor.
Answer:
1. Accumulated Depreciation (Dr.) $2,890
Motor #12 (Cr.) $2,890
2. Cash (Dr.) $260
Accumulated Depreciation (Dr.) $4,020
Loss on Sale (Dr.) $160
Motor #8 (Cr.) $4,440
3. Cash (Dr.) $470
Accumulated Depreciation (Dr.) $5,490
Gain on Sale (Cr.) $230
Motor #16 (Cr.) $5,730
Explanation:
1. New Motor #22 (Dr.) $6,800
Accumulated Depreciation (Dr.) $4,590
Gain on Sale (Cr.) $230
Motor #6 (Cr.) $5,860
Cash (Cr.) $5,300
2. New Motor #23 (Dr.) $6,450
Accumulated Depreciation (Dr.) $4,940
Loss on Sale (Dr.) $200
Motor #9 (Cr.) $5,420
Cash (Cr.) $6,170
What does an effective business begin with?
Answer:
trust, rules and schedules, a plan on what your selling, those products
Explanation:
I'm just saying what I think makes an effective business
Super Clinics offers one service that has the following annual cost and utilization estimates: Variable cost per visit $ 10 Annual direct fixed costs $50,000 Allocation of overhead costs $20,000 Expected utilization 1,000 visits What price per visit must be set if the clinic wants to make an annual profit of $10,000 on the service? A. $ 70 B. $ 80 C. $ 90 D. $100 E. $110
Answer:
C. $ 90
Explanation:
Number of visits = 1,000
Variable cost = $10 × 1,000 = $10,000
Fixed cost = $50,000
Overhead cost = $20,000
Required profit = $10,000
So,Total Cost = Variable Cost+ Fixed Cost+ Overhead Cost
= $10,000 + $50,000 + $20,000
= $80,000
Now, Price per Visit = (Total Cost+ Required Profit) ÷ Number of visits
= ($80,000 + $10,000) ÷ 1,000
= $90,000 ÷ 1,000
= $90
Sarasota Corporation sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. During the last part of 2017, Sarasota had the following transactions related to notes payable.
Sept. 1 Issued a $16,800 note to Pippen to purchase inventory. The 3-month note payable bears interest of 9% and is due December 1. (Sarasota uses a perpetual inventory system.)
Sept. 30 Recorded accrued interest for the Pippen note.
Oct. 1 Issued a $22,800, 10%, 4-month note to Prime Bank to finance the purchase of a new climbing wall for advanced climbers. The note is due February 1.
Oct. 31 Recorded accrued interest for the Pippen note and the Prime Bank note.
Nov. 1 Issued a $27,600 note and paid $8,100 cash to purchase a vehicle to transport clients to nearby climbing sites as part of a new series of climbing classes. This note bears interest of 6% and matures in 12 months.
Nov. 30 Recorded accrued interest for the Pippen note, the Prime Bank note, and the vehicle note.
Dec. 1 Paid principal and interest on the Pippen note.
Dec. 31 Recorded accrued interest for the Prime Bank note and the vehicle note.
I was wondering how to do the journal entries for...
1. October 1st
2. November 1st
3. November 30th
4. December 31st
Answer:
Sarasota Corporation
Journal Entries for the following dates:
Oct. 1: Debit Equipment $22,800
Credit 10% Notes Payable (Prime Bank) $22,800
To record the issuance of a 4-month note.
Nov. 1: Debit Vehicle $35,700
Credit Cash $8,100
Credit 6% Notes Payable $27,600
To record the issuance of a 12-month note and cash for purchased vehicle.
Nov. 30: Debit Interest Expense $454
Credit Interest payable $454
To accrue the interests due on the notes.
Dec. 31: Debit Interest Expense $328
Credit Interest payable $328
To accrue the interests due on the outstanding notes.
Explanation:
a) Data and Analysis:
Sept. 1: Inventory $16,800 9% Notes Payable (Pippen) $16,800
3-month note
Sept. 30: Interest Expense $126 Interest payable $126
Oct. 1: Equipment $22,800 10% Notes Payable (Prime Bank) $22,800
4-month note
Oct. 31: Interest Expense $316 Interest payable 316
Nov. 1: Vehicle $35,700 Cash $8,100 6% Notes Payable $27,600
12-month note
Nov. 30: Interest Expense $454 Interest payable $454
Dec. 1: Notes payable (Pippen) $16,800 Interest payable $378 Cash $17,178
Dec. 31: Interest Expense $328 Interest payable $328
Management of Mittel Company would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported: Inspection time 0.3 days Wait time (from order to start of production) 16.6 days Process time 2.8 days Move time 1.0 days Queue time 4.2 days
1. Compute the throughput time.
2. Compute the manufacturing cycle efficiency (MCE) for the quarter. (Round your answer to 2 decimal places.)
3. What percentage of the throughput time was spent in non–value-added activities? (Enter your answer as a percentage (i.e., 0.12 should be entered as 12).)
4. Compute the delivery cycle time.
5. If by using Lean Production all queue time during production is eliminated, what will be the new MCE? (Round your percentage answer to 1 decimal place (i.e., 0.123 should be entered as 12.3).)
Answer:
1. Throughput time = Process time + Inspection time + Move time + Queue time
Throughput time = 2.8 + 0.3 + 1 + 4.2
Throughput time = 8.3 days
2. Manufacturing cycle efficiency = Value added time/Throughput time
Manufacturing cycle efficiency = 2.8/8.3
Manufacturing cycle efficiency = 0.3373493976
Manufacturing cycle efficiency = 0.34
3. Percentage of the throughput time spent in non-value-added activities:
= 1 - 0.34
= 0.66
= 66%
4. Delivery cycle time = Wait time + Throughput time
Delivery cycle time = 16.6 + 8.3
Delivery cycle time = 24.9
Delivery cycle time = 25 days
5. New throughput time = Process time + Inspection time + Move time + Queue time
New throughput time = 2.8 + 0.3 + 1
New throughput time = 4.1
Manufacturing cycle efficiency = Value added time/Throughput time
Manufacturing cycle efficiency = 2.8/4.1
Manufacturing cycle efficiency = 0.6829268292682927
Manufacturing cycle efficiency = 68.30%
The following is a December 31, 2018, post-closing trial balance for Almway Corporation.
Account Title Debits
Credits
Cash 77,000
Investments 142,000
Accounts Receivable 76,000
Investments 216,000
Prepaid insurance (for the next 9 Months) 6,000
Land 122,000
Buildings 436,000
Accumulated Depreciation-Buildings 116,000
Equipment 126,000
Accumulated Depreciation-Equipment 76,000
Patents (net of amortization) 26,000
Accounts Payable 107,000
Notes Payable 178,000
Interest Payable 36,000
Bonds Payable 256,000
Common Stock 348,000
Retained Earnings 110,000
Totals 1,227,000 1,227,000
Additional information:_______.
The investment in equity securities account includes an investment in common stock of another corporation of $36,000 which management intends to hold for at least three years. The balance of these investments is intended to be sold in the coming year. The land account includes land which cost $31,000 that the company has not used and is currently listed for sale. The cash account includes $21,000 restricted in a fund to pay bonds payable that mature in 2024 and $29,000 restricted in a three-month Treasury bill. The notes payable account consists of the following: a $36,000 note due in six months. a $56,000 note due in six years. a $56,000 note due in five annual installments of $11,200 each, with the next installment due February 15, 2022. The $66,000 balance in accounts receivable is net of an allowance for uncollectible accounts of $9,000. The common stock account represents 106,000 shares of no par value common stock issued and outstanding. The corporation has 500,000 shares authorized.
Required:
Prepare a classified balance sheet for the Almway Corporation at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
Almway Corporation
Classified Balance Sheet
As of December 31, 2018
Assets
Current Assets:
Cash $27,000
Restricted fund (treasury bill) 29,000
Marketable Investments 142,000
Accounts Receivable 85,000
Allowance for Uncollectibles (9,000)
Short-term investment 180,000
Prepaid insurance
(for the next 9 Months) 6,000 $460,000
Long-term Assets:
Restricted fund (bonds payable) 21,000
Long-term investment 36,000
Land for sale 31,000
Land in use 91,000
Buildings 436,000
Accumulated Depreciation (116,000)
Equipment 126,000
Accumulated Depreciation (76,000)
Patents (net of amortization) 26,000 $575,000
Total assets $1,035,000
Liabilities and Equity
Current Liabilities:
Accounts Payable 107,000
Short-term notes payable 47,500
Interest Payable 36,000 $190,500
Long-term liabilities:
Long-term notes payable 130,500
Bonds Payable 256,000 $386,500
Total liabilities $577,000
Equity:
Common Stock 348,000
Retained Earnings 110,000 $458,000
Total liabilities and equity $1,035,000
Explanation:
a) Data and Calculations:
Almway Corporation
Trial Balance as of December 31, 2018
Account Title Debits Credits
Cash 77,000
Investments 142,000
Accounts Receivable 76,000
Investments 216,000
Prepaid insurance
(for the next 9 Months) 6,000
Land 122,000
Buildings 436,000
Accumulated Depreciation-Buildings 116,000
Equipment 126,000
Accumulated Depreciation-Equipment 76,000
Patents (net of amortization) 26,000
Accounts Payable 107,000
Notes Payable 178,000
Interest Payable 36,000
Bonds Payable 256,000
Common Stock 348,000
Retained Earnings 110,000
Totals 1,227,000 1,227,000
Additional Information and Analysis:
a. Investments in equity 216,000:
Short-term investment 180,000
Long-term investment 36,000
b. Land 122,000:
Land for sale 31,000
Land in use 91,000
c. Cash 77,000:
Restricted fund (bonds payable) 21,000
Restricted fund (treasury bill) 29,000
Cash balance 27,000
d. Notes Payable 178,000:
Short-term notes payable 36,000 + 11,500 = $47,500
Long-term notes payable 130,500
e. Accounts Receivable 76,000:
Allowance for uncollectibles 9,000
Accounts receivable 85,000
f. Common Stock 348,000:
Authorized shares, 500,000
106,000 Issued shares, no par 348,000
Almway Corporation
Adjusted Trial Balance as of December 31, 2018
Account Title Debits Credits
Cash 27,000
Restricted fund (bonds payable) 21,000
Restricted fund (treasury bill) 29,000
Marketable Investments 142,000
Accounts Receivable 85,000
Allowance for Uncollectibles 9,000
Short-term investment 180,000
Long-term investment 36,000
Prepaid insurance
(for the next 9 Months) 6,000
Land for sale 31,000
Land in use 91,000
Buildings 436,000
Accumulated Depreciation-Buildings 116,000
Equipment 126,000
Accumulated Depreciation-Equipment 76,000
Patents (net of amortization) 26,000
Accounts Payable 107,000
Short-term notes payable 47,500
Long-term notes payable 130,500
Interest Payable 36,000
Bonds Payable 256,000
Common Stock 348,000
Retained Earnings 110,000
Totals 1,236,000 1,236,000
Jenny has a $82,500 basis in her 50 percent partnership interest in the JM Partnership before receiving any distributions. This year JM makes a proportionate operating distribution to Jenny of a parcel of land with an $110,000 fair value and a $89,700 basis to JM. The land is encumbered with a $42,850 mortgage (JM's only liability). What is Jenny's basis in the land and her remaining basis in JM after the distribution
Answer:
$89,700 land basis, $14,225 JM basis.
Explanation:
Calculation to determine Jenny's basis in the land and her remaining basis in JM after the distribution
Based on the information given her basis in the land equal to the amount of $89,700 while are remaining basis in JM is the amount of $14,225, Calculated as:
Predistribution basis in JM $82,500
Add deemed contribution $21,425
(50%*$42,850)
Less: basis allocated to land ($89,700)
Remaining basis in JM $14,225
Therefore her basis in the land and her remaining basis in JM after the distribution are:
$89,700 land basis, $14,225 JM basis.
Oriole Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 270 $30 $ 8,100 April 15 purchase 440 36 15,840 April 23 purchase 290 39 11,310 1,000 $35,250 Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Ending inventory $enter a dollar amount Cost of goods sold $enter a dollar amount
Answer:
. Ending inventory = $15,270
cost of goods sold = $19,980
Explanation:
FIFO means first in, first out. It means that it is the first purchased inventory that is the first to be sold
the cost of goods sold would be determined using the prices of inventories on April 1 and 15
cost of goods sold
270 x $30 = $8100
+
(600 - 270) x $36 = $11,880
cost of goods sold = $19,980
ending inventory would consist of the inventory not sold on April 15 and the inventory bought on April 23
inventory not sold on April 15 = 440 - (600 - 270) = 110
110 x 36 = $3960
+
290 x 39 = 11,310
total = $15,270
Market screening is a method of market analysis and assessment that permits management to identify a small number of desirable markets by eliminating those judged to be less attractive.
When considering initial entry into international markets, or later expansion of international presence, companies Inust screen the large number of potential markets to identify the smaller subset of most promising candidates. This exercise examines one type of market screening, called country screening, and reviews the steps in this screening process as well as key tasks and considerations in each step.
Place the country screening steps in the order they occur, from first to last.
Rank the options below
1. Assess competitive forces such as the number, size, and financial strength of the competitors.
2. Assess economic and financial forces such as trends in inflation, currency exchange rates, and interest rates.
3. Assess sociocultural forces associated with doing business in a particular area or country,
4. Assess basic need potential of specific goods or services
5. Assess political and legal forces such as profit remittance barriers and policy stability
6. Assess prospective markets through personal visits to those markets with the best potential
Answer: See explanation
Explanation:
The country screening steps when placed accordingly from the first to the last will be:
1. Assess basic need potential of specific goods or services.
2. Assess economic and financial forces such as trends in inflation. currency exchange rates, and interest rates.
3. Assess political and legal forces such as profit remittance barriers and policy stability.
4. Assess sociocultural forces associated with doing business in a particular area or country.
5. Assess competitive forces such as the number, size, and financial strength of the competitors.
6. Assess prospective markets through personal visits to those markets with the best potential.
Cinnamon Buns Co. (CBC) started 2021 with $52,500 of merchandise on hand. During 2021, $284,000 in merchandise was purchased on account with credit terms of 2/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,800. Merchandise with an invoice amount of $3,000 was returned for credit. Cost of goods sold for the year was $302,000. CBC uses a perpetual inventory system. What is cost of goods available for sale, assuming CBC uses the gross method
Answer:
$337,680
Explanation:
Calculation to determine the cost of goods available for sale, assuming CBC uses the gross method
Beginning inventory $52,500
Inventory purchased $284,000
Freight $9,800
Merchandise returned ($3,000)
Discounts [($284,000 – $3,000) x 2%)] ($5,620)
Cost of goods available for sale $337,680
Therefore the cost of goods available for sale, assuming CBC uses the gross method is $337,680
Assume that IBM leased equipment that was carried at a cost of $120,000 to Swander Company. The term of the lease is 6 years beginning December 31, 2019, with equal rental payments of $30,044 beginning December 31, 2019. The fair value of the equipment at commencement of the lease is $150,001. The equipment has a useful life of 6 years with no salvage value. The lease has an implicit interest rate of 8%, no bargain purchase option, and no transfer of title. Collectibility of lease payments for IBM is probable. Assume the sales-type lease was recorded at a present value of $150,001.
Prepare IBM’s December 31, 2016, journal entries at commencement of the lease.
December 31, 2016:
Account Name Debit Credit
December 31, 2016
Account Name Debit Credit
Answer:
Date Account titles and Explanation Debit Credit
Dec 31, 19 Lease receivables $150,001
Cost of goods sold $120,000
Sales $150,001
Equipment $120,000
(To record the lease)
Dec 31, 19 Cash $30,044
Lease receivables $30,044
(To record the receipt of lease installment)
Fallon Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $172,800 to $215,400. Variable costs and their percentage relationship to sales are sales commissions 7%, advertising 4%, traveling 4%, and delivery 1%. Fixed selling expenses will consist of sales salaries $35,500, depreciation on delivery equipment $7,500, and insurance on delivery equipment $1,100.
Required:
Prepare a monthly flexible budget for each $11,100 increment of sales within the relevant range for the year ending December 31, 2017.
Answer:
Sales Revenue Total expenses
$172,800 $71,748
$183,900 $73,524
$195,000 $75,300
$206,100 $77,076
Explanation:
Note: See the attached excel file for the monthly flexible budget for the year ending December 31, 2017.
Also note that since it is stated that the budget must be for each $11,100 increment of sales within the relevant range of $172,800 to $215,400 of monthly expected sales, the highest expected sales that fall within the range is $206,100 in the attached excel file.
From the attached excel file, we have:
Sales Revenue Total expenses
$172,800 $71,748
$183,900 $73,524
$195,000 $75,300
$206,100 $77,076
Vector Technology is suffering from cyber-loafing, which is employee use of work internet access for personal use. Can you lead a task force in creating a new social media policy for Vector before productivity drops even further? Keep in mind that you don't want to create employee backlash! Instructor Instructions: Please review the instruction and respond to the questions for this homework assignment.
Answer:
New social media policy about the internet usage should be implemented with strict internal controls so that there is no back loafing again by the employees in the organization.
Explanation:
Cyber loafing is Internet back loafing when employees are using company's internet access for personal use or for a second job. Some organizations do allow personal use of internet but to some extent and it should be monitored. When employees find loopholes in the company's internal controls they will create some opportunity for fraud. The internet access given to employees should be monitored carefully and there should be strict internal controls so that any misuse is avoided.
Suppose that the demand for milk in the United States is represented by the following equation, where P is the price of a gallon of milk. QD = 200 – 10P The supply of milk is represented by the following equation: QS = –10 + 50P The equilibrium price of a gallon of milk is a) $ (give your answer to two decimals), and the equilibrium quantity is b) million gallons.
Answer:
a.
P = $3.50 per gallon
b.
Equilibrium Quantity = 165 million gallons
Explanation:
a.
The equilibrium price is the price at which Quantity demanded equals quantity supplied. To calculate the equilibrium price using the given equations for demand and supply, we need to equate both equations.
Equilibrium Price (P) calculation
QD = QS
200 - 10P = -10 + 50P
200 + 10 = 50P + 10P
210 = 60P
P = 210 / 60
P = $3.50 per gallon
b.
The equilibrium quantity can be calculated by inserting the value of Price (P) in any of the equation for demand or supply.
Equilibrium Quantity = 200 - 10(3.50)
Equilibrium Quantity = 200 - 35
Equilibrium Quantity = 165 million gallons
Marginal revenue,graphically is:_________
a. the slope of a line from the origin to a point on the total revenue curve.
b. the slope of a line from the origin to the end of the total revenue curve.
c. the slope of the total revenue curve at a given point.
d. the vertical intercept of a line tangent to the total revenue curve at a given point.
e. the horizontal intercept of a line tangent to the total revenue curve at a given point.
Answer:
c. the slope of the total revenue curve at a given point.
Explanation:
Cost-volume-profit analysis is also known as the break even analysis, it is an important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is. It is used to determine how changes in differing levels of activities such as costs and volume affect a company's operating income and net income.
Marginal cost can be defined as the additional or extra cost that is being incurred by a company as a result of the production of an additional unit of a product or service.
Generally, marginal cost can be calculated by dividing the change in production costs by the change in level of output or quantity.
Marginal revenue can be defined as the additional amount of money that is gained or generated by a business firm from the sales of an additional unit of a product or service.
Marginal revenue, graphically is the slope of the total revenue curve at a given point.
This ultimately implies that, the change in the value of the total revenue curve at a given point gives the marginal revenue.
Robert Parish Corporation purchased a new machine for its assembly process on January 1, 2014. The cost of this machine was $315,900. The company estimated that the machine would have a salvage value of $15,900 at the end of its service life. Its life is estimated at 4 years, and its working hours are estimated at 40,000 hours. Year-end is December 31.
Instructions
Compute the depreciation expense under the following methods and complete the depreciation schedules below.
(a) Straight-line depreciation.
(b) Activity method for 2014 and 2015, assuming that machine usage was 15,000 hours for 2014; 11,710 hours for 2015; 12,150 hours for 2016 and 1,140 hours for 2017.
(c) Sum-of-the-years'-digits.
(d) Double-declining-balance.
Answer:
(a) Straight-line depreciation.
depreciation expense per year = ($315,900 - $15,900) / 4 = $75,000
(b) Activity method for 2014 and 2015, assuming that machine usage was 15,000 hours for 2014; 11,710 hours for 2015; 12,150 hours for 2016 and 1,140 hours for 2017.
depreciation expense per unit = $300,000 / 40,000 = $7.50 per unit
depreciation expense 2014 = $7.50 x 15,000 = $112,500
depreciation expense 2015 = $7.50 x 11,710 = $87,825
(c) Sum-of-the-years'-digits.
depreciation expense 2014 = $300,000 x 4/10 = $120,000
depreciation expense 2015 = $300,000 x 3/10 = $90,000
(d) Double-declining-balance.
depreciation expense 2014 = $315,900 x 2 x 1/4 = $157,950
depreciation expense 2015 = $157,950 x 2 x 1/4 = $78,975
depreciation expense 2016 = $78,975 x 2 x 1/4 = $39,487.50
depreciation expense 2017 = $39,487.50 - $15,900 = $23,587.50
Scott Company has 5 sales employees, each of whom earns $16,000 per month and is paid on the last working day of the month. Each employee's wages are subject to FICA social security taxes of 6.2% and Medicare taxes of 1.45% on all wages. Withholding for each employee also includes federal income tax of 16% and monthly medical insurance premiums of $440 for each employee. Metro Express also pays federal unemployment taxes of 0.8% of the first $7,000 paid each employee, and state unemployment taxes of 4.0% of the first $7,000 paid to each employee.
Required:
Prepare the journal entries to record (1) the employee’s wages and payroll taxes at January 31, (2) the employer’s payroll taxes at January 31, and (3) payment of the employer’s payroll tax liabilities at January 31 for Metro Express. Metro Express deposits taxes monthly.
Answer:
Scott Company
Journal Entries:
January 31:
Debit Payroll $80,000
Credit Salaries Payable $57,200
Credit Payroll Taxes Payable $22,800
To record the salaries and taxes payable.
Debit Salaries Payable $57,200
Debit Payroll Taxes Payable $22,800
Credit Cash $80,000
To record the payment of the salaries and taxes.
Explanation:
a) Data and Calculations:
Number of sales employees = 5
Salary per month = $16,000 each
Withholding taxes:
FICA social security taxes of 6.2% = $992
Medicare taxes 1.45% = $232
Federal income tax = 16% = $2,560
Monthly Medical Insurance = $440
FUTA = 0.8% of the first $7,000 = $56
SUTA = 4.0% of the first $7,000 = $280
Total withholding tax deductions = $4,560
Payroll total ($16,000 * 5) = $80,000
Withholding taxes for each:
FICA social security taxes of 6.2% = $992 * 5 - $4,960
Medicare taxes 1.45% = $232 * 5 - $1,160
Federal income tax = 16% = $2,560 * 5 - $12,800
Monthly Medical Insurance = $440 * 5 - $2,200
FUTA = 0.8% of the first $7,000 = $56 * 5 - $280
SUTA = 4.0% of the first $7,000 = $280 * 5 - $1,400
Total withholding tax deductions = $4,560 * 5 = $22,800
Net pay = $57,200
The following is the ending balances of accounts at December 31, 2018 for the Valley Pump Corporation Account Title Cash Accounts receivable Inventories Interest payable Marketable securities Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Copyright (net of amortization) Prepaid expenses (next 12 months) Accounts payable Deferred revenues (next 12 months) Notes payable Allowance for uncollectible accounts Common stock Retained earnings Totals Debits Credits 30,000 66,000 91,000 15,000 54,000 130,000 325,000 105,000 85,000 30,000 17,000 37,000 70,000 25,000 275,000 5,000 250,000 60,000 835,000 835,000
1. The $130,000 balance in the land account consists of $105,000 for the cost of land where the plant and office buildings are located. The remaining $25,000 represents the cost of land being held for speculation.
2. The $54,000 balance in the investment in equity securities account represents an investment in the common stock of another corporation. Valley intends to sell one-half of the stock within the next year.
3. The notes payable account consists of a $110,000 note due in six months and a $165,000 note due in three annual installments of $55,000 each, with the first payment due in August of 2022.
Required:
Prepare a classified balance sheet for the Valley Pump Corporation at December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.)
Answer and Explanation:
The preparation of the classified balance sheet is presented below:
Valley Pump Corporation
Balance sheet
December 31, 2018
Assets
Current assets
Cash $30,000
Marketable securities $27,000
Account receivable $61,000
Inventory $91,000
Prepaid expense $37,000
Investments
Marketable securities $27,000
Land $25,000 $52,000
Property, plant & equipment
Land $105,000
Buildings $325,000
Equipment $85,000
Less:
Accumulated depreciation -$135,000
Net property, plant & equipment $380,000
Intangibles
Copyright $17,000
Total assets $695,000
Liabilities & shareholder equity
Current liabilities
Account payable $70,000
Interest payable $15,000
Unearned revenue $25,000
Note payable $110,000
Current maturities $55,000
Total current liabilities $275,000
Long term liabilities
Note payable $110,000
Shareholder equity
Common stock $250,000
Retained earnings $60,000
Total shareholder equity $310,000
Total liabilities & shareholder equity $695,000
Working notes
Accumulated depreciation = building + equipment
= $105,000 + $60,000
= $695,000
The note payable is
= $55,000 × 2
= $110,000
Suppose you trade dollars and euros for a bank that has branches in Los Angeles and Frankfurt. You can electronically transfer the funds between the two branch locations at no cost, and trading commissions are negligible. The current dollar-per-euro exchange rate in Los Angeles is E$/EURLA=1.5653 , while in Frankfurt, it is E$/EURFR=1.586.
You can make a profit for the bank if you buy euros in _______ and sell them in _________.
Answer:
Explanation:
Profit will be made by you for the bank if you buy the Euros in Los Angeles, and sell the Euros to customers in Frankfurt...
Buying in Los Angeles comes at a price of $1 = €1.5653, then going ahead to sell in Frankfurt means you get to sell it at a rate of $1 = €1.586
Although this is a very tiny difference, of 0.0207. The reality is that when you're doing a lot of tradings that involves currency, you tend to see the profit. If for example, a total of $1 million is traded, then the profit would be $20700, which we all can attest to the fact that it's a lot of money.
For a business owner, insurance is a cost just like any other expenses. How does buying business
insurance and offering insurance to employees affect the business's profit and success?
Answer:
It adds an additional expense which means a percentage of profits are depleted. However, it contributes to the wellbeing of the employees showing that they are cherished and have the opportunity to earn benefits which can play a role in motivating them. Due to this it is more likely the workforce would be more comfortable working for the organisation thus leading to a higher chance at success.
A disadvantage associated with in-kind transfers to reduce poverty is that they Question 1 options: alter peoples' incentives, whereas a negative income tax does not alter peoples' incentives. do not allow poor families to make purchases based on their preferences. can only be distributed by the federal government. cannot restrict the group of recipients and some middle-class families may benefit from them.
Answer:
do not allow poor families to make purchases based on their preferences.
Explanation:
Economics can be classified into two (2) categories, namely;
1. Macroeconomics: it can be defined as the study of behaviors, performance and factors that affect the entire economy. Hence, it focuses on aggregate phenomena such as price level, economic growth, Gross Domestic Product (GDP), inflation, unemployment and national income levels with respect to the central bank, demand or supply shocks, government policies, aggregate spending and savings.
2. Microeconomics: it can be defined as the study of the effect of price and quantity levels through interactions between individual buyers and sellers in various markets.
Hence, it is focuses on analyzing or evaluating the decisions of consumers (buyers) and those of firms (sellers) such as methods of production, pricing; and the manner in which government policies affect those decisions.
An in-kind transfers refers to the type of payment made in form of material properties rather than in cash.
A disadvantage associated with in-kind transfers to reduce poverty is that they do not allow poor families to make purchases based on their preferences. Since these families cannot purchase the choice goods with money.
According to behavioral economics, consumers A. do not always behave rationally because they ignore sunk costs. B. always behave rationally because they take into account monetary costs and nonmonetary opportunity costs. C. do not always behave rationally because they fail to ignore sunk costs . D. always behave rationally because they are overly optimistic about their future behavior. E. do not always behave rationally because they take into account nonmonetary opportunity costs.
Answer:
A. do not always behave rationally because they ignore sunk costs.
Explanation:
Behavioral economics can be defined as a branch of economics that typically deals with the study of market transactions in which consumers of goods and services make choices or buying decisions that doesn't look economically rational.
According to behavioral economics, consumers do not always behave rationally because they ignore sunk costs i.e being overly optimistic about their behavior in the future while ignoring the fact that the money has been spent on purchase and cannot be recovered again.
Sunk cost can be defined as a cost or an amount of money that has been spent on something in the past and as such cannot be recovered. Thus, because a sunk cost has been incurred by an individual or organization it can't be recovered and as such it is irrelevant in the decision-making process such as investments, projects etc.
Basically, sunk costs are referred to as fixed costs.
Suppose that you are running a business, and you need some extra space for one year. Your bank offers you a loan of $200,000 at 0% interest. You consider borrowing this amount to buy the building, use it for one year, and then sell the building to pay back the loan. Unfortunately, the economy in which you are operating is experiencing deflation at the rate of 10% per year. After one year, you should be able to sell the building for____.
Suppose that owning the building for a year would earn you $12,000. To decide whether you will be better off by owning it for one year and then selling it, you seek advice from three different people: (1) Your brother says that you should not buy the building because in one year it will cost you $200,000. (2) Your accountant says that you should definitely buy the building because you can borrow $200,000 at zero interest while the building will generate $12,000 in extra income. Then when you sell it, you will be $12,000 richer. (3) Your bookkeeper says that if you sell the building in a year, you will have to come up with more money to pay off the loan than you will make in extra income.
Keeping in mind that the economy experiences deflation at the rate of 10%, who is right?
A. Your bookkeeper is right, because the extra income you will earn will be less than the cost of owning the building for the year.
B. Your brother is correct, because when the nominal interest rate is zero, the cost of a building is its full purchase price.
C. Your accountant is right, because when the nominal interest rate is zero, you do not incur any cost when you take out a loan.
Now, suppose you inherited $200,000 in cash from your uncle who had kept it hidden in his mattress. Assuming the nominal interest rate is -1%, which of the following options will maximize the amount of cash that you have in one year?
A. Holding onto your $200,000 in cash.
B. Buying the building, because you can earn an additional $12,000 in income if you own the building for one year and then sell it.
C. Depositing the cash in the bank, because the 10% rate of deflation makes the value of your dollars fall even more rapidly than 1% per year.
A high real interest rate will keep firms from borrowing to finance investment in capital, but it will not keep firms with cash from investing in capital.
A. False
B. True
Answer:
Question 1
The building will depreciate by 10% in one year so in one year you will only be able to sell it for:
= 200,000 * ( 1 - 10%)
= $180,000
Question 2.
A. Your bookkeeper is right, because the extra income you will earn will be less than the cost of owning the building for the year.
If you buy the building, you will have to pay back $200,000 in a year.
However, you will only be able to sell the building for $180,000 and you will receive an income of $12,000 for a total of:
= 180,000 + 18,000
= $192,000
This is $8,000 less than the $200,000 you borrowed so you will pay back more than you borrowed.
Question 3
A. Holding onto your $200,000 in cash.
Holding your cash is the best option because investing in the building would lead to a loss of $8,000 after a year.
The bank would also reduce your balance by 1%. It is therefore best to hold the money.
Question 4
A. False
Companies with cash still have to make decisions based on gains and they will stand to gain more if they deposited their money because this would give them more interest profits.
Marketing and distributing the company's product are categorized as
Answer:
thye are categorized as a channel
Explanation:
Which of the following is NOT one of the steps taken in the financial planning process? a. Develop a set of forecasted financial statements under alternative versions of the operating plan in order to analyze the effects of different operating procedures on projected profits and financial ratios. b. Consult with key competitors about the optimal set of prices to charge, i.e., the prices that will maximize profits for our firm and its competitors. c. Forecast the funds that will be generated internally. If internal funds are insufficient to cover the required new investment, then identify sources from which the required external capital can be raised. d. Determine the amount of capital that will be needed to support the plan. e. Monitor operations after implementing the plan to spot any deviations and then take corrective actions.
Answer:
B)Consult with key competitors about the optimal set of prices to charge, i.e., the prices that will maximize profits for our firm and its competitors.
Explanation:
The financial planning process can be regarded as series of steps which states best way of using money and investments as well as other assets so that financial goals can be potentially achieved. Most of the financial plans has its focus savings of goals as well as payoff goals even estate planning goals so that roadmap to financial freedom can be set.
The steps that can be taken in the financial planning process are;
✓ Forecast the funds that will be generated internally. If internal funds are insufficient to cover the required new investment, then identify sources from which the required external capital can be raised.
✓Develop a set of forecasted financial statements under alternative versions of the operating plan in order to analyze the effects of different operating procedures on projected profits and financial ratios
✓Determine the amount of capital that will be needed to support the plan. e. Monitor operations
Computing Straight-Line and Double-Declining-Balance Depreciation
On January 2, 2016, Dechow Company purchases a machine to help manufacture a part for one of its key products. The machine cost $306,180 and is estimated to have a useful life of six years, with an expected salvage value of $32,760.
Compute each year's depreciation expense for 2016 and 2017 for each of the following depreciation methods.
a. Straight-line.
b. Double-declining balance.
Answer:
a.
2016 = $45,570
2017 = $45,570
b.
2016 = $102,080
2017 = $68,014
Explanation:
Straight line method
Straight line method charges a fixed amount of depreciation
Depreciation Charge = (Cost - Salvage Value) ÷ Estimated useful life
2016
Depreciation Charge = $45,570
2017
Depreciation Charge = $45,570
Double declining method
Double declining method charges a higher amount of depreciation at the early years and less in the later years
Depreciation Charge = 2 x SLDP x BVSLDP
2016
Depreciation Charge = 2 x 16.67 % x $306,180 = $102,080
2017
Depreciation Charge = 2 x 16.67 % x ($306,180 - $102,080) = $68,014
A company's income statement reported net income of $80,000 during 2016. The income tax return excluded a revenue item of $6,000 (reported on the income statement) because under the tax laws the $6,000 would not be reported for tax purposes until 2017. Which of the following statements is incorrect assuming a 21% tax rate?
a. Income tax expense on the income statement exceeds the tax liability to the IRS.
b. The $6,000 of revenue creates a deferred tax liability.
c. A $2,100 deferred tax liability is reported as of December 31, 2014.
d. Income tax expense on the income statement is $25,900.
Answer:
d. Income tax expense on the income statement is $25,900.
Explanation:
Calculation to determine the statements that is incorrect assuming a 21% tax rate
INCOME TAX EXPENSE
Using this formula
Income tax expense=Net income*Tax rate
Let plug in the formula
Income tax expense=$80,000*.21
Income tax expense=$16,800
Based on the above calculationThe income tax expense ($80,000 × .21) on the income statement is $16,800
Therefore the statements that is incorrect assuming a 21% tax rate is
INCOME TAX EXPENSE ON THE INCOME STATEMENT is $25,900
Suppose that in a given month $51 million is deposited into the banking system while $55 million is withdrawn. Also suppose that the Fed has set the reserve requirement at 25 percent and that banks have no excess reserves at the beginning of the month. What is the maximum amount of new checkable-deposit money that can be created (or removed) by the banking system as a result of these deposits and withdrawals?
Answer and Explanation:
The computation of the maximum amount of new checkable deposit money is given below:
The Net impact represent the decrease in the reserves by
= $55 million - $51 million
= $4 million
Now the
Multiplier = 1 ÷ Reserve requirement
= 1 ÷ 25%
= 4
Now Decrease in money supply is
= $4 million × 4
= -$16 million