Answer:
410 rooms and $22,550
Explanation:
The computation of the break even point and in dollars is shown below:
Break even point in units is
= Fixed cost ÷ (Selling price - variable cost)
where,
Fixed cost is
= Salaries + Utilities + Depreciation + Maintenance
= $6,600 + $1,100 + $900 + $420
= $9,020
And, the selling price is $55
And the variable cost is
= Maid service + other cost
= $22 + $11
= $33
So, the break even point in points is
= ($9,020) ÷ ($55 - $33)
= 410 rooms
And the break even point in dollars is
= 410 rooms × $55
= $22,550
Terapin Company engages in the following external transactions for November.
1. Purchase equipment in exchange for cash of $21,300.
2. Provide services to customers and receive cash of $6,100.
3. Pay the current month's rent of $900.
4. Purchase office supplies on account for $1,500.
5. Pay employees' salaries of $1,300 for the current month.
Required:
Record the transactions. Terapin uses the following accounts: Cash, Supplies, Equipment, Accounts Payable, Service Revenue, Rent Expense, and Salaries Expense. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
Answer and Explanation:
The journal entries are shown below:
1. Equipment Dr $21,300
To cash $21,300
(Being the equipment is purchased for cash)
For recording this we debited the equipment as it increased the assets and credited the cash as it reduced the assets
2. Cash Dr $6,100
To Service revenue $6,100
(Being the cash received is recorded)
For recording this we debited the cash as it increased the assets and credited the service revenue as it increased the revenue
3. Rent expense $900
To Cash $900
(Being the rent is paid)
For recording this we debited the rent expense as it increased the expenses and credited the cash as it reduced the assets
4. Office supplies Dr
To Account payable
(Being the office supplies purchased on account)
For recording this we debited the office supplies as it increased the assets and credited the account payable as it increased the liabilities
5. Salaries expense
To cash
(Being the salaries paid is recorded)
For recording this we debited the salaries expense as it increased the expenses and credited the cash as it reduced the assets
For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $984,000. Selected information for 2021 from Fidelity’s records follows: Interest income on municipal governmental bonds $ 40,000 Depreciation claimed on the 2021 tax return in excess of depreciation on the income statement 64,000 Carrying amount of depreciable assets in excess of their tax basis at year-end 104,000 Warranty expense reported on the income statement 30,000 Actual warranty expenditures in 2021 20,000 Fidelity's income tax rate is 25%. At January 1, 2021, Fidelity's records indicated balances of zero and $10,000 in its deferred tax asset and deferred tax liability accounts, respectively. Required: 1. Determine the amounts necessary to record income taxes for 2021, and prepare the appropriate journal entry. 2. What is Fidelity’s 2021 net income?
Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
1).
Particular Amount ($) Tax rate Tax amount($)
Accounting income $984,000
Less-Interest income on municipal bond -$40,000
Income to taxation $944,000 $0.25 $236,000
Less-tax return in excess of depreciation -$64,000 0.25 $16,000
Warranty expenses($30,000-$20,000) $10,000 0.25 $2,500
Taxable income $890,000 0.25 $222,500
Now
Journal Entry
Income tax expense A/c Dr.$236,000
Deferred tax asset A/c Dr.$2500
To Deferred tax liability A/c $16,000
To Income tax payable A/c $222,500
(Being the income tax expense for 2021 is recorded )
2 .Net Income of Fidelity = Accounting Income - Income Tax Expense
= $984,000 - $236,000
= $784,000
Final answer:
The total income tax expense for Fidelity Engineering is $252,000, considering both permanent and temporary differences. The net income for the year ended December 31, 2021, is $732,000 when subtracting the tax expense from the pretax accounting income.
Explanation:
Calculating Income Taxes and Net Income for Fidelity Engineering:
To calculate the income taxes for 2021, we need to consider the temporary differences that will reverse in the future, such as the excess depreciation on the company's tax return and the difference in warranty expense reporting. Additionally, we need to consider the permanent difference from the interest income on municipal bonds, which is not taxable.
Here are the steps and journal entry for the income taxes:
Permanent difference adjustment: Subtract the interest income on municipal bonds from the pretax accounting income: $984,000 - $40,000 = $944,000.Temporary difference adjustment: Add the excess tax depreciation back to the adjusted pretax income: $944,000 + $64,000 = $1,008,000.Calculate the total tax expense at Fidelity's tax rate: $1,008,000 x 25% = $252,000.Record the tax expense: Debit Income Tax Expense $252,000, Credit Deferred Tax Liability $16,000 (difference between book and tax depreciation), Credit Taxes Payable $236,000.The net income for 2021 for Fidelity Engineering is then calculated as follows:
Pretax Accounting Income - Tax Expense = Net Income
$984,000 - $252,000 (calculated from step 3 above) = $732,000.
Dapper Corporation had only one job in process on May 1. The job had been charged with $1,710 of direct materials, $3,500 of direct labor, and $6,280 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $23.50 per direct labor-hour.During May, the following activity was recorded:Raw materials (all direct materials): Beginning balance $ 7,800Purchased during the month $26,800Used in production $30,300Labor: Direct labor-hours worked during the month 1,700Direct labor cost incurred $21,250Actual manufacturing overhead costs incurred $38,100Inventories: Raw materials, May 30 ? Work in process, May 30 $20,000Work in process inventory on May 30 contains $3,125 of direct labor cost. Raw materials consist solely of items that are classified as direct materials.The balance in the raw materials inventory account on May 30 was:____________a) $4,180b) $4,300c) $4,420d) $4,820
Answer:
b. $4,300
Explanation:
Data provided
Beginning balance = $7,800
Purchases = $26,800
Used in Production = $30,300
The computation of balance in the raw materials inventory is shown below:-
Balance in the raw materials inventory = Beginning balance + Purchases - Used in production
= $7,800 + $26,800 - $30,300
= $34,600 - $30,300
= $4,300
Therefore for computing the ending inventory we simply applied the above formula.
Jamison Company developed the following reconciling information in preparing its June bank reconciliation: Cash balance per bank, 6/30 $13,000 Note receivable collected by bank 4,000 Outstanding checks 7,000 Deposits-in-transit 2,500 Bank service charge 35 NSF check 1,900 Using the above information, determine the cash balance per books (before adjustments) for the Jamison Company. a. $8,065 b. $10,565 c. $15,065 d. $6,435
Final answer:
The cash balance per books for Jamison Company before adjustments is $10,565. It is found by adjusting the cash balance per bank of $13,000 with deposits in transit, note receivable collected by the bank, outstanding checks, bank service charges, and an NSF check.
Explanation:
To determine the cash balance per books (before adjustments) for the Jamison Company, we need to use the reconciling information provided to adjust the cash balance per bank. We start with the cash balance per bank and make the necessary deductions and additions based on the reconciling items.
The cash balance per bank on 6/30 is $13,000. We need to add any deposits that are in transit since these have been recorded by the company but are not yet reflected in the bank balance. We also add any notes receivable collected by the bank as these increase the company's cash balance. On the other hand, we must subtract any outstanding checks, bank service charges, and NSF (non-sufficient funds) checks, as these will decrease the company's cash balance.
Thus, we calculate the cash balance per books as follows:
Cash balance per bank: $13,000
Add: Deposits-in-transit: $2,500
Add: Note receivable collected by bank: $4,000
Subtract: Outstanding checks: -$7,000
Subtract: Bank service charges: -$35
Subtract: NSF check: -$1,900
Therefore, the cash balance per books (before adjustments) is:
$13,000 + $2,500 + $4,000 - $7,000 - $35 - $1,900 = $10,565
Burns offers Realtor a commission of 10 percent of the sales price if Realtor can find a buyer for the Burns Building for $500,000. Realtor spends funds to research and obtain potential-buyer contact information and locates Walters, who is willing to accept the $500,000 offer to sell from Burns. Before any transaction takes place, Burns revokes his offer to Realtor and refuses to sell the property to Walters. Burns's revocation is:
Answer:
Burns’s revocation is not effective
Explanation:
Revocation can be defined as the
the cancellation of either a decree, decision, or even a promise and the making void of some deed which was previously existing.
Therefore according to the information given Burns’s revocation is not effective because Burns’s promise to pay for a particular performance which isa unilateral contract which was said to be rendered irrevocable once Realtor performed by finding a buyer for the building.
Answer:
Burns’s revocation is not effective
Explanation:
The most recent financial statements for Kerch, Inc., are shown here (assuming no income taxes): Income Statement Balance Sheet Sales $ 8,400 Assets $ 14,000 Debt $ 6,000 Costs 6,390 Equity 8,000 Net income $ 2,010 Total $ 14,000 Total $ 14,000 Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $9,996. What is the external financing needed? (Do not round intermed
Answer: $268.10
Explanation:
Assets and Costs are proportional to sales meaning they grow at the same rate.
Sales rate of growth is,
= (9,996-8,400)/8400
=19%
Assuming that costs grew by 19% then Costs next year will be ,
= 6,390 * (1 + 0.19)
= $7,604.1
Meaning that Net Income is,
= Sales - Costs.
= 9,996 - 7,604.1
= $2,391.9
Retained earnings or net income is added to Equity
Total Equity= 8,000 + 2391.9
Total Equity =$10,391.90
Total Assets also grew by 19% as per the question so,
= 14,000* (1 + 0.19)
=$16,660
Going by the Accounting Equation,
Total assets = Total equity + Total debt
Hence external financing needed
16,660 = 10391.9 + 6000 + Additional funding
Additional funding = 16,660 - 10391.9 - 6,000
Additional funding = $268.10
Final answer:
The external financing needed for Kerch, Inc. to meet the projected increase in sales for the next year, considering no changes in the debt level and all net income is retained, is $268.10.
Explanation:
Calculating External Financing Needed for Kerch, Inc.
To calculate the external financing needed for Kerch, Inc., we need to evaluate the changes in the company's balance sheet that will occur due to the projected increase in sales. Since assets and costs are proportional to sales, we can forecast these figures for the next year based on the new sales projection of $9,996.
First, we determine the percentage increase in sales:
$9,996 (Projected Sales) / $8,400 (Current Sales) = 1.19, which is a 19% increase in sales.
Next, we apply this percentage to the current assets to estimate the next year's assets:
$14,000 (Current Assets) * 1.19 (Percentage Increase) = $16,660 (Projected Assets).
Similarly, we calculate the projected costs:
$6,390 (Current Costs) * 1.19 (Percentage Increase) = $7,604.10 (Projected Costs).
Now we calculate the projected net income. Note that since there are no taxes or dividends, net income will equal sales minus costs:
$9,996 (Projected Sales) - $7,604.10 (Projected Costs) = $2,391.90 (Projected Net Income).
Given that there are no dividends and net income is added to equity, the new equity value will be:
$8,000 (Current Equity) + $2,391.90 (Projected Net Income) = $10,391.90 (Projected Equity).
Since debt is not proportional to sales, it remains at $6,000.
Total projected financing required (Projected Assets) = Projected Debt + Projected Equity,
$16,660 (Total Projected Financing) - $6,000 (Debt) - $10,391.90 (Equity) = $268.10 (External Financing Needed).
The external financing needed for Kerch, Inc. to support the projected increase in sales is $268.10.
MC Qu. 112 A company is considering... A company is considering the purchase of new equipment for $105,000. The projected annual net cash flows are $41,000. The machine has a useful life of 3 years and no salvage value. Management of the company requires a 8% return on investment. The present value of an annuity of $1 for various periods follows: Period Present value of an annuity of $1 at 8% 1 0.9259 2 1.7833 3 2.5771 What is the net present value of this machine assuming all cash flows occur at year-end
Answer:
Net Present Value = $660.98
Explanation:
The Net present value (NPV) is the difference between the Present value (PV) of cash inflows and the PV of cash outflows. A positive NPV implies a good and profitable investment project and a negative figure implies the opposite.
NPV of an investment:
NPV = PV of Cash inflows - PV of cash outflow
PV of cash inflow = A× (1- (1+r)^(-n))/r
A- annul cash inflow, r- 8%, n- 3
PV of cash inflow= 41,000× (1- 1.08^(-3))/0.08
= 105,660.98
Initial cost = 105,000
NPV = 105,660.98 - 105,000
= $ 660.98
Suppose you know that a company’s stock currently sells for $66.50 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. If it’s the company’s policy to always maintain a constant growth rate in its dividends, what is the current dividend per share?
Answer:
$2.86
Explanation:
The computation of current dividend per share is shown below:-
Dividend yield = 9% × 2
= 4.5%
Current price = Company stock × Dividend yield
= $66.50 × 4.5%
= 2.9925
Current dividend per share = Current price ÷ (1 + Dividend yield percentage)
= 2.9925 ÷ (1 + 0.045)
= 2.9925 ÷ 1.045
= $2.86
So, for computing the current dividend per share we simply applied the above formula.
Final answer:
To calculate the current dividend per share, the company's constant growth rate in dividends implies that the dividend yield is equal to the growth rate (4.5% in this scenario). Multiplying the current stock price of $66.50 by the dividend yield gives us the current dividend per share, which is $2.9925.
Explanation:
The student is asking about calculating the current dividend per share based on the information given about a company's stock price, the total return, and the required return. Given that the total return is equally split between capital gains yield and dividend yield, and the required return on the stock is 9%, each yield would thus be 4.5% (half of the total required return).
Since the company maintains a constant growth rate in its dividends, we can use the Gordon Growth Model (also known as the Dividend Discount Model) which states that the current stock price (P0) equals the dividend next year (D1) divided by the required return (r) minus the dividend growth rate (g). In this case, we know that the current stock price (P0) is $66.50, the required return (r) is 9%, and we've identified the dividend yield (which is the same as the capital gains yield in this example) to be 4.5% which is also the growth rate (g). To find the current dividend (D0), we can rearrange the formula to D0 = P0 × dividend yield. So, the current dividend per share would be $66.50 × 4.5%, which equals $2.9925 per share.
___________________ are for-profit organizations that contract out or lease a wide range of light manufacturing, warehousing, and distribution services to other companies. Group of answer choices Public warehouses Private warehouses Breakbulk warehouses Consolidation warehouses
Answer:
Consolidation warehouses
Explanation:
Consolidation warehouses are warehouses that, as the name implies, consolidate a number of smaller shipments from other companies into a larger shipment, in a specific area.
Consolidation warehouses can also offer light manufacturing services, but their main function is to consolidate shipment into a single place, and distribute those shipments in a more cost-efficient manner.
Bridgeport Company is presently testing a number of new agricultural seeds that it has recently harvested. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully satisfied. The right of return extends for 4 months. Bridgeport estimates returns of 15%. Bridgeport sells these seeds on account for $1,390,000 (cost $764,500) on January 2, 2017. Customers are required to pay the full amount due by March 15, 2017.
Prepare the journal entry for Bridgeport at January 2, 2017.
Answer:
1/2/2017
Dr Accounts Receivable $1,390,000
Cr Sales Revenue $1,390,000
Dr Cost of Goods Sold $764,500
Cr Inventory $764,500
Explanation:
Bridgeport Company Journal entry
1/2/2017
Dr Accounts Receivable $1,390,000
Cr Sales Revenue $1,390,000
Dr Cost of Goods Sold $764,500
Cr Inventory $764,500
Which of the following best represents deep-level similarity? employees who seek challenges in assignments and like to work collaboratively employees in their mid-thirties with 10 years' work experience in the publishing industry employees who speak Spanish and share similar religious values colleagues who both hail from the same neighborhood in Alabama employees who are college graduates with a degree in business management
Answer:
Employees who seek challenges in assignments and like to work collaboratively.
Explanation:
Deep-Level similarities can be defined as similarities in personal characteristics such as personality, values, and attitudes. These similarities differ from the surface-level similarities and are more powerful. Deep-level similarities are more psychological based than physical.
From the given options the one that exemplifies the deep-level similarity is the first option. The similarity is based on the psychological or personal characteristics of the employee. The quality of seeking challenges in assignments and working collaboratively reveals the personality of the employee, thus, it is the correct answer.
So, the correct answer is the first option.
Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and administrative, $75. Fixed costs are: $18,000 manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/15. Production was 20 units per year in 2015–2017. Sales were 20 units in 2015, 16 units in 2016, and 24 units in 2017. Income under absorption costing for 2017 is
A) $4,800.
B) $8,400.
C) $9,600.
D) $13,200.
Answer:
B) $8,400
Explanation:
Absorption costing consider all the cost incurred in production either variable or fixed as production cost.
As we know variable cost vary with the change in the sale but the fixed costs remains constant whatever the level of sale is.
As per given data
Selling price = $6,600
Variable manufacturing cost = $3,600
Manufacturing Fixed Cost = $18,000
Total cost per unit = $3,600 + $18,000/20 = $4,500
Sales = Selling price x Numbers of units sold = $6,600 x 16 = $105,600
Cost of goods sold = Units sold x Cost per unit = 16 units x $4,500 = $72,000
Gross income = Sales - Cost of Goods sold = $105,600 - $72,000 = $33,600
Selling and Admin Cost = Variable cost + Fixed = (16 x $75) + $24,000 = $25,200
Net Income = Gross Income - Selling and Admin cost = $33,600 - $25,200 = $8,400
The Income from operation under absorption costing for 2017 is $8,400.
Cost per unit = Variable Manufacturing per unit + Fixed Manufacturing per unit
Cost per unit = $3,600 + $18,000 / 20
Cost per unit = $3,600 + $900
Cost per unit = $4,500
Sales price = Selling Price per unit * Units Sold
Sales price = $6,600 * 16
Sales price = $105,600
Cost of Goods Sold = Cost per unit * Units Sold
Cost of Goods Sold = $4,500 * 16
Cost of Goods Sold = $72,000
Selling & Administrative Expense = Variable Selling and Administrative Expense * Units Sold + Fixed Selling and Administrative Expense
Selling & Administrative Expense = $75 * 16 + $24,000
Selling & Administrative Expense = $25,200
Income from Operation = Sales - Cost of Goods Sold - Selling and Administrative Expense
Income from Operation = $105,600 - $72,000 - $25,200
Income from Operation = $8,400
Hence, the Income from operation under absorption costing for 2017 is $8,400.
Therefore, the Option B is correct.
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Mather Company purchased equipment on January 1, 2018 at a total invoice cost of $336,000; additional costs of $6,000 for freight and $30,000 for installation were incurred. The equipment has an estimated salvage value of $12,000 and an estimated useful life of five years. The amount of accumulated depreciation at December 31, 2019 if the straight-line method of depreciation is used is:
$148,800.
$129,600.
$144,000.
$132,000.
Answer:
The accumulated depreciation at 31 December 2019 is $144000
Explanation:
When recording the purchase of a fixed asset, the asset should be recognized at cost at which the asset is purchased plus all the necessary costs that are incurred to bring the asset to the location and in the condition necessary to use as required and intended by the management.
The equipment purchased by Mather should be recorded as,
Cost of equipment = 336000 + 6000 + 30000 = $372000
The freight and installation are non recurring and necessary expenses to bring the asset to the location and in the condition for use as intended by management. So, these expenses are capitalized.
The straight line depreciation charges a constant depreciation expense every year through out the useful life of the asset.
Straight line depreciation = (Cost - Salvage Value) / estimated useful life
Straight line depreciation per year = (372000 - 12000) / 5
Straight line depreciation per year = $72000
So, the accumulated depreciation at 31 December 2019 is,
Accumulated depreciation = 72000 + 72000 = $144000
Annapolis Company has two service departments (Computer Operations & Maintenance Services). Annapolis has two production departments (Mixing Department & Packaging Department.) Annapolis uses a step allocation method where the Computer Operations Department is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Computer Operations has costs of $140,000 and Maintenance Services has costs of $115,000 before any allocations. What amount of Maintenance Services total cost is allocated to the Mixing Department? (round to closest whole dollar) Employees are: Computer Operations 4 Maintenance Services 4 Mixing Department 5 Packaging Department 8
Answer:
$56,900
Explanation:
Compt. Maint. Mixing Packaging
Dept Cost 140,000 115,000
Cost allocation 32941 41177 65882
(Computer)
Cost allocation
(Maintenance) 56900 91041
Total 98077 156923
Workings.
Computer department cost allocation
Maintenance department = 4/17*140000 =32941
Mixing department = 5/17*140000 =41177
Packaging department = 8/17*140000= 65882
Maintenance department cost allocation
Total cost allocated = 147941
Mixing department = 5/13*147941 = 56900
Packaging department = 8/13*147941 =91041
The Mixing Department of the Annapolis Company will be allocated approximately $44,231 of the total Maintenance Services cost, based on the proportion of its employees to the total number of employees in the production departments.
Explanation:The Maintenance Services costs will be divided equally between the Mixing Department and the Packaging Department as those are the two production departments. Given that there are 5 employees in the Mixing Department and 8 in the Packaging Department, this constitutes a total of 13 production employees.
Each department's allocation will be based on the proportion of its employees to the total number of employees. For the Mixing Department, this is 5/13 or about 38.4615% (rounded to the nearest tenth of a percent). Therefore, the Mixing Department will be allocated about 38.4615% of the total Maintenance Services cost of $115,000.
Applying this percentage to the total cost, the allocation for the Mixing Department is approximately $44,231 (rounded to the nearest whole dollar).
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g "Slack, Inc. had an IPO on June 1, 2019 and sold 275m shares with par value of $0.03 for $37.50/share. What is the journal entry Slack records on June 1, 2019? Group of answer choices DR Common Stock $8.25m; DR PIC-Common Stock $10,304.25m; CR Cash $10,312.50m DR Cash $10,312.50m; CR Common Stock $8.25m; CR PIC-Common Stock $10,304.25m DR Cash $10,312.50m; CR Common Stock $10,312.50m DR Common Stock $10,312.50m; CR Cash $10,312.50"
Answer:
The correct option here is the second one,DR Cash $10,312.50m; CR Common Stock $8.25m; CR PIC-Common Stock $10,304.25m
Explanation:
The cash realized from the initial public offer(IPO)=275 m shares*$37.50=$10,312.5 million
The par value of the 275 million shares=275 million*$0.03=$8.25 million
The paid capital in excess of par value=($37.50-$0.03)*275 million=$10,304.25 million
The appropriate accounting entries would to debit cash with total proceeds of $10,312.5 million
Credit common stock with $8.25 million
As well as crediting paid-in capital in excess of par value with $10,304.25
104. During 2017, Logan Corporation acquired a mineral mine for $4,000,000 of which $400,000 was ascribed to land value after the mineral has been removed. Geological surveys have indicated that 10 million units of the mineral could be extracted. During 2017, 1, 500,000 units were extracted and 1,000,000 units were sold. What is the amount of depletion expense for 2017
Answer:
$540,000
Explanation:
Depletion expense = (unit extracted in a year/ total units ) x (Cost- salvage value)
(1, 500,000 / 10,000,000) x (
$4,000,000 - $400,000) = 0.15 × $3,600,000 = $540,000
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Money, Inc., a calendar year S corporation in Denton, Texas, has two unrelated shareholders, each owning 50% of the stock. Both shareholder record a $400,000 stock basis as of January 1. At the beginning of the tax year, Money reports balances in AAA of $300,000 and AEP of $600,000. During the year, Money generates operating income of $100,000. At the end of the year, Money distributes securities worth $1,000,000, with an adjusted basis of $800,000. The two shareholders consent to an AAA bypass election. What is the Federal income tax effects of these transactions for the shareholders? If an amount is zero, enter "0". Each shareholder receives a $ taxable distribution and a $ tax-free distribution from AAA. The AAA is $ at the end of the year, and each shareholder's basis is $ . AEP is reduced to $ .
Answer:
Both shareholder has $200,000 of dividend income resulting from the distribution.
Explanation:
Solution
Given that:
Now,
When the securities are issued, there will be a gain recognized of $200,000 to Money Inc. thus, The $200,000 = $1 million - $800,000.
The AAA will increase by $200,000.
This gain known will flow through to the two shareholders of Money Inc. as 50% is owned by both shareholders and the stock amount for each shareholder will be $200,000/2 = $100,000.
so, the basis of stock for each shareholder will increase by $100,000.
Now,
The distribution before AAA of securities the result will be = 300,000+100,000+200,000 = $600,000.
Then,
A $1 million distribution will be acted on first as coming first from AAA to the extent of $600,000.the amount balanced will be $1 million - $600,000 = $400,000. This will be serve as coming from AEP.
so,
The AAA is = 600,000 – 600,000 = 0.
The basis for each shareholder before distribution will be = 400,000+100,000+50,000 = 550,000.
The portion of non taxable of the above distribution = 300,000 from AAA.
Hence,the basis = 550,000 – 300,000 =250,000
Therefore, each shareholder has $200,000 of dividend income resulting from the distribution.
Dell is a product of the Digby company. Digby's sales forecast for Dell is 1856 units. Digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected. (They would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) Taking current inventory into account, what will Dell's Production After Adjustment have to be in order to have a 10% reserve of units available for sale
Answer:
Dell's Production After Adjustment will be 2,041 units
Explanation:
According to the given data we have that Dell forecast for sales is 1856 and there considering the 10% reserve first we would need to calculate the number of units after the reserve of 10% as follows:
10% reserve units=0.10×1856=185 units
Therefore, total required units=1,856+185
total required units=2,041 units
Dell's Production After Adjustment will be 2,041 units
Larkspur, Inc. issues $4.2 million, 5-year, 7% bonds at 103, with interest payable on January 1. The straight-line method is used to amortize bond premium. Prepare the journal entry to record the sale of these bonds on January 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Answer:
Dr. Cash $4,326,000
Cr. Premium on Bond $126,000
Cr. Bond Payable Account $4,200,000
Explanation:
The difference between the face value of the bond and the sale value of the bond is known as premium or the discount on the bond. If the face value is higher from the sale value the bond is issued on the discount and if the sale value of the bond is higher than the face value the bond is issued on the premium.
In this question the bond is issued on premium and the amount of premium is calculated as follow
Premium on the Bond = Sale value - Face value = ($4,200,000 x 103%) - $4,200,000 = $126,000
The Premium will be amortized during the life of the bond to maturity and deducted from the interest expense.
Use the following scenario to answer the following questions: Babak owns a sports practice facility called Boston Batting Cages in Boston, Massachusetts. During the first year of operation, Boston Batting Cages incurred many costs. In that year, Babak spent $5,000 on labor, $2,000 on maintenance, and $1,000 on electricity. Babak took out a loan to open his business, in which he would have earned $1,500, and his previous job, which he could get back at any time, paid him $50,000. If Boston Batting Cages received $80,000 in revenues, what were the economics profits
Answer:
$20,500
Explanation:
Economic profit is the difference between the total revenue generated and the total explicit (direct) and implicit (Indirect cost ) incurred
Total revenue - (explicit cost + implicit cost )
Revenue 80,000
Explicit cost
Labor 5000
maintenance 2000
Electricity 1000
Total (8000)
Implicit cost
loan revenue forgone 1500
Previous earning 50000
Total (51,500)
Economic profit 20,500
Final answer:
The economic profits for Boston Batting Cages are calculated by subtracting both explicit and implicit costs from the revenues. The business earned an economic profit of $20,500 after accounting for all costs.
Explanation:
To calculate the economic profits for Babak's business, Boston Batting Cages, we need to consider both explicit and implicit costs against the revenues. Explicit costs are the direct, out-of-pocket expenses for the business operation, whereas implicit costs represent the opportunity costs of using resources that could be employed elsewhere.
Explicit Costs: Labor ($5,000) + Maintenance ($2,000) + Electricity ($1,000) = $8,000Implicit Costs: Foregone salary ($50,000) + Foregone interest on loan ($1,500) = $51,500Total Costs: $8,000 (explicit) + $51,500 (implicit) = $59,500Revenues: $80,000Economic Profit: Revenues - Total Costs = $80,000 - $59,500 = $20,500Economic profits consider both the tangible costs of running the business and the opportunity costs, providing a comprehensive picture of the business's true profitability.
Hammerstein Corporation offers a variety of share-based compensation plans to employees. Under its restricted stock award plan, the company, on January 1, 2018, granted 2 million of its $1 par common shares to various division managers. The shares are subject to forfeiture if employment is terminated within four years. The common shares have a market price of $20.4 per share on the award date. Required: 1. Determine the total compensation cost from these restricted shares. 2. & 3. Prepare the appropriate journal entries. 4. Suppose a 10% forfeiture rate was expected prior to vesting. Determine the total compensation cost, assuming the company follows the fair value approach and chooses to anticipate forfeitures at the grant date.
Answer and Explanation:
As per the data given in the question,
1)
Fair value per share = $20.4
Number of Share = 2 million
Fair value of award = Fair value per share ×Number of Share
= $20.4 × 2 million
= $40.8 million
2) No Entry
3)
Compensation expense($40.8 million÷4 years) $10.2 million
To Paid in capital - restricted stock($20.4-$10.2) $10.2 million
(Being the compensation expense is recorded)
4)
Fair value per share = $20.4
Share granted = 2 million
(100%-10%) forfeiture rate = 90%
fair value of award = $20.4×2×90%
= $36.72 million
Benny asked his marketing team to research and collect data regarding the demographics of people residing in the state of California. He wanted to use this business data to come up with a product design for his company to consider in the future. What should Benny use to analyze this business data?
A.
human resources distribution system
B.
information dispersal unit
C.
management information system
D.
management delegation system
E.
distribution and management system
Answer:
C, Management Information System
Explanation:
Benny should use a Management Information System (MIS), a computerized system for data analysis and decision-making, to analyze the demographic data collected by his marketing team.
Explanation:To analyze the demographic data obtained by his marketing team, Benny should use a Management Information System (MIS). Option C is the correct answer. An MIS is a computer system used for processing and organizing data in a manner that supports decision-making in an organization. Using MIS, Benny can organize, sort and study the collected demographic data effectively. It will facilitate better decision-making regarding product design geared towards the population of California. MIS not only helps with data collection and analysis but also in the planning, controlling and decision-making processes within a business.
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On January 1, the Elias Corporation issued 10% bonds with a face value of $56,000. The bonds are sold for $60,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, ten years from now. Elias records straight-line amortization of the bond discount. The actual interest expense reported in the income statement for the year ended December 31 of the first year is
Answer:
$6,000
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the Interest Expenses of Total Bond by using following formula:-
Interest Expenses = Face Value × Rate of Bonds
= $56,000 × 10%
= $5,600
Amortization Expenses = (Bond Issue Price - Bond Face Value) ÷ Bond Term
= ($60,000 - $56,000) ÷ 10
= $400
Interest Expenses of Total Bond = Interest Expenses + Amortization Expenses
= $5,600 + $400
= $6,000
In October, Pine Company reports 22,000 actual direct labor hours, and it incurs $198,900 of manufacturing overhead costs. Standard hours allowed for the work done is 22,100 hours. The predetermined overhead rate is $9.25 per direct labor hour. In addition, the flexible manufacturing overhead budget shows that budgeted costs are $7.19 variable per direct labor hour and $51,500 fixed. Compute the overhead volume variance. Normal capacity was 25,000 direct labor hours. Overhead Volume Variance
Answer:
$5,974 U
Explanation:
a). Variable Cost = Standard Hours × Variable Per Direct Labor
= 22,100 hours × $7.19 = $158,899
Predetermined Overhead Charged to Production = Standard Hours × Overhead Rate Per Direct Labor
= 22,100 hours × $9.25 = $204,425
Budgeted Overhead Volume Variance = Variable Cost + Fixed Cost - Predetermined Overhead Charged to Production
=$158,889 + $51,500 - $204,425 = $5,974 U
b). Alternative Method:-
Normal Capacity = 25,000
Standard Hours = 22,100
Fixed Overhead Rate at Normal Capacity = Fixed Cost ÷ Normal Capacity Hours
= $51,500 ÷ 25,000 = $2.06
Overhead Volume Variance = (Normal Capacity - Standard Hours) × Fixed Overhead Rate at Normal Capacity
= (25,000 - 22,100) × 2.06 = 2,900 × $2.06 = $5,974 U
The overhead volume variance is calculated as the difference between actual hours and standard hours, multiplied by the predetermined overhead rate.
Overhead Volume Variance:
To calculate the overhead volume variance, we use the formula:
Overhead Volume Variance = (Actual Hours - Standard Hours) x Predetermined Overhead Rate
Plugging in the values, the calculation would be: (22,000 - 22,100) x $9.25 = -$925 Overhead Volume Variance.
Production records show that there were 440 units in the beginning inventory, 30% complete, 1,440 units started, and 1,600 units transferred out. The beginning work in process had materials cost of $2,220 and conversion costs of $1,720. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.a) How many units are in process at May 31?(b) What is the unit materials cost for May?(c) What is the unit conversion cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)
Work in Process�Painting
5/1 Balance 3,940 5/31 Transferred out ?
5/31 Materials 6,610
5/31 Labor 4,800
5/31 Overhead 1,300
5/31 Balance ?
Answer and Explanation:
The computation is shown below:
a. The number of units processed is
= Beginning work in process units + completed and started units - transferred out units
= 440 units + 1,440 units - 1,600 units
= 280 units
b. The material cost per unit is
= Total cost ÷ equivalent units
where,
Total cost is
= Opening work in process + material cost
= $2,220 + $6,610
= $8,830
And, the equivalent units is
= Units transferred out + ending work in process
= 1,600 + 280
= 1,880
So, the material cost per unit is
= $8,830 ÷ 1,880 units
= $4.70
c. The conversion cost per unit is
= Total cost ÷ equivalent units
where,
Total cost is
= Opening work in process + labor cost + overhead cost
= $1,720 + $4,800 + $1,300
= $7,820
And, the equivalent units is
= Units transferred out + ending work in process × completion percentage
= 1,600 + 280 × 40%
= 1,712
So, the material cost per unit is
= $7,820 ÷ 1,712 units
= $4.57
What are the benefits of "inventory pooling"? Establishing pools of inventory at each supplier and customer locationsCentralizes inventory into fewer locations thus reducing safety stocks and the amount of inventory needed in the supply chain.Pulling back inventory when firms have too much at retail level.Providing a one-stop means for the customer to return goods
Answer:
The benefits of Inventory Pooling includes:
centralizing inventory into fewer locations thus reducing safety stocks and the amount of inventory needed in the supply chain.Pulling back inventory when firms have too much at retail level.Explanation:
inventory pooling is an operational strategy used to increase efficiency in stock management and analysis.
It is a supply chain tool that consolidates multiple inventory locations into a single one.
It is a centralized system that helps with stock keeping. It makes projections easier and helps manage shortfalls that may arise due to demand uncertainty.
It is cost effective by reducing cost of employing more staff and reduces the percentage error due to the centralized portal.
By reducing operational costs, profit is maximized.
A telephone customer service center wants to ensure that the majority of its customers’ calls are answered within a reasonable amount of wait time. Based on customer surveys, the company determined that the acceptable wait time that customers considered acceptable is between 10 and 45 seconds. A large sample of current customer calls was monitored. The average wait time was found to be 31 seconds with a standard deviation of 4.5 seconds.
What is the Capability Index for this process?
A. 1.30
B. 1.04
C. 1.56
D. 0.43
Answer:
The Capability Index for this process is 1.04. The right answer is B
Explanation:
According to the given data we have the following:
μ = 31 Seconds
USL = 45
LSL = 10
Standard deviation σ= 4.5
Therefore, in order to calculate the Capability Index for this process we would have to use the following formula:
Cpk=Min( USL-μ , μ- LSL)
3×σ 3×σ
Cpk=Min( 45-31 , 31- 10)
3×4.5 3×4.5
Cpk = Min ( 1.04,1.56) = 1.04
The Capability Index for this process is 1.04
At the present time, Water and Power Company (WPC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,050.76 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 6.53% 7.51% 5.22% 7.84%
Answer:
6.53%
Explanation:
For computing the after cost of debt we need to use the RATE formula i.e to be shown in attached spreadsheet. Kindly find it below:
Given that,
Present value = $1,050.76
Future value or Face value = $1,000
PMT = 1,000 × 10% = $100
NPER = 5 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying this above formula
1. The pretax cost of debt is 8.70
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 8.70% × ( 1 - 0.25)
= 6.53%
Varto Company has 12,600 units of its sole product in inventory that it produced last year at a cost of $31 each. This year’s model is superior to last year’s, and the 12,600 units cannot be sold at last year’s regular selling price of $49 each. Varto has two alternatives for these items: (1) they can be sold to a wholesaler for $13 each or (2) they can be processed further at a cost of $272,300 and then sold for $34 each. Should Varto sell the products as is or process further and then sell them?
Answer:
It is more profitable to sell the units as-is.
Explanation:
Giving the following information:
Number of units= 12,600
Varto has two alternatives for these items:
(1) they can be sold to a wholesaler for $13 each
(2) they can be processed further for $272,300 and then sold for $34 each.
The first cost of $31 is a sunk cost, it will remain no matter which option is chosen. We will not take it into account for the decision making process.
Option 1:
Effect on income= 12,600*13= $163,800
Option 2:
Effect on income= 12,600*34 - 272,300= $156,100
It is more profitable to sell the units as-is.
Jasper Company has sales on account and for cash. Specifically, 64% of its sales are on account and 36% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $520,000 for April, $530,000 for May, and $555,000 for June. The beginning balance of Accounts Receivable is $304,500 on April 1. Prepare a schedule of budgeted cash receipts for April, May, and June.
Answer:
See the explanation below
Explanation:
Jasper Company
Schedule of Budgeted Cash Receipts for April, May, and June
Details April ($) May ($) June ($)
March Sales 304,500 0 0
April Sales 187,200 332,800 0
May Sales 0 190,800 339,200
June sales 0 0 199,800
Total receipts 491,700 523,600 539,000