Answer and Explanation:
a. The computation of the economic order quantity is shown below:
[tex]= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}[/tex]
[tex]= \sqrt{\frac{2\times \text{35,000}\times \text{\$500}}{\text{\$0.35}}}[/tex]
= 10,000 yards
b.. The total cost of ordering cost and carrying cost equals to
= Annual ordering cost + Annual carrying cost
= Annual demand ÷ Economic order quantity × ordering cost per order + Economic order quantity ÷ 2 × carrying cost per unit
= 35,000 ÷ 10,000 × $500 + 10,000 ÷ 2 × $0.35
= $1,750 + $1,750
= $3,500
c. Optimal No. of Orders is
= Annual Demand ÷Order Quantity
= 35,000 ÷ 10,000
= 3.5
Time between two orders is
= No. of Working Days ÷ No. of orders
= 365 ÷ 3.5
= 104 days
We assume there is a 365 days in a year and we applied the above formulas
Final answer:
The Western Jeans Company should order 10,000 yards of denim at a time, which results in 4 orders per year and an inventory reorder every approximately 91 days. The Minimum Total Annual Inventory Cost will be $3750.
Explanation:
Optimal Order Quantity and Inventory Management
The Western Jeans Company needs to determine the optimal order quantity of denim that minimizes total annual inventory costs, which include both ordering and holding costs. The formula for calculating the Economic Order Quantity (EOQ) is given by:
EOQ = √(2DS)/H)
, where:
D is the annual demand
S is the cost per order
H is the holding cost per unit per year
Given that the annual demand (D) is 35,000 yards, ordering cost (S) is $500, and holding cost (H) is $0.35 per yard, we can compute the EOQ as follows:
EOQ = √((2 * 35000 * 500) / 0.35) = √(35,000,000 / 0.35) = √(100,000,000) = 10,000 yards.
The optimal number of orders per year is then D/EOQ, which is 35,000/10,000 = 3.5 orders per year. Since we can't have a fraction of an order, we round it to 4 orders per year. The optimal time between orders is the number of working days in a year divided by the number of orders, which we can approximate to 365/4, resulting in about 91.25 days between orders.
The minimum total annual inventory cost can be found by adding the total ordering costs and total holding costs. Total ordering costs are the number of orders multiplied by the cost per order, which is 4 * $500 = $2000. Total holding costs are EOQ/2 * H, which is 10,000/2 * 0.35 = $1750.
Minimum Total Annual Inventory Cost = Total Ordering Costs + Total Holding Costs = $2000 + $1750 = $3750.
Thus, the Western Jeans Company should order 10,000 yards of denim at a time, place 4 orders per year, and reorder every approximately 91 days to achieve the minimum total annual inventory cost of $3750.
Big Boy Burgers (BBB) is an American fast food restaurant chain that has franchises around the world. Recently, BBB managers have been concerned about protecting the firm’s intellectual property, which includes the recipes for its unique burger sauces and specialty burger buns. Although BBB has never experienced a theft of intellectual property, the firm’s managers feel BBB should be more cautious. Managers are meeting with security and legal experts to discuss the options available to the firm which would protect BBB from future international problems.Which of the following questions would be more important for the experts to evaluate when determining how to ensure intellectual property protection for Big Boy Burgers?A) What should be the penalties for theft of the recipes for their unique burger sauces and specialty burger buns?B) Is BBB partnering with ethical franchisees that have no intention of becoming BBB competitors in the future?
C) What are the commonly counterfeited goods in the market?
D) How are BBB franchisees modifying recipes and menus to meet the needs and desires of customers in local markets?
Answer:
B) Is BBB partnering with ethical franchisees that have no intention of becoming BBB competitors in the future?
Explanation:
The question that "Is BBB partnering with ethical franchisees that have no intention of becoming BBB competitors in the future?" would be more important for the experts to evaluate when determining how to ensure intellectual property protection for Big Boy Burgers.
The managers and experts at BBB should ensure they are in partnership with ethical franchisees in order to protect the firm’s intellectual property, which includes the recipes for its unique burger sauces and specialty burger buns.
An unethical franchise would be much more concerned with gaining access to their business plans and strategies, so as to compete with them or even go as far as pushing them out of the fast food business.
Continental Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Continental Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved.
Transportation Costs Gross-Ton Miles
January $24,500,000 3,000,000
February 22,375,000 2,500,000
March 29,000,000 6,300,000
April 34,800,000 9,500,000
May 40,312,500 12,750,000
June 35,500,000 10,000,000
Determine the variable cost per gross-ton mile and the total fixed cost.
Using the high-low method, the variable cost per gross-ton mile for Continental Railroad is $1.775, and the total fixed cost is $17,937,500. This was calculated by identifying the highest and lowest activity levels and their associated costs.
Explanation:To determine the variable cost per gross-ton mile and the total fixed cost using the high-low method from the operating data provided by Continental Railroad, we identify the months with the highest and lowest activity levels, which are April (highest) and February (lowest). The difference in gross-ton miles between these months is 9,500,000 - 2,500,000 = 7,000,000 gross-ton miles. Similarly, the difference in transportation costs is $34,800,000 - $22,375,000 = $12,425,000.
To calculate variable cost per gross-ton mile, divide the difference in costs by the difference in gross-ton miles: $12,425,000 ÷ 7,000,000 = $1.775. Hence, the variable cost is $1.775 per gross-ton mile. Next, to find the fixed costs, we calculate the total variable cost at the low activity level (February) by multiplying the variable cost per gross-ton mile by February's gross-ton miles: $1.775 * 2,500,000 = $4,437,500. Subtract this amount from the total cost of February to get the total fixed cost: $22,375,000 - $4,437,500 = $17,937,500. Therefore, the total fixed cost is $17,937,500.
The variable cost per gross-ton mile is $1.75, and the total fixed cost is $18,000,000.
To estimate the fixed and variable components of transportation costs using the high-low method, we need to identify the months with the highest and lowest activity levels (gross-ton miles). We then use these data points to calculate the variable cost per gross-ton mile and the total fixed cost.
Step 1: Identify the High and Low Activity Levels
From the given data:
Highest activity: May (12,750,000 gross-ton miles, $40,312,500 cost)
Lowest activity: February (2,500,000 gross-ton miles, $22,375,000 cost)
Step 2: Calculate the Variable Cost per Gross-Ton Mile
The high-low method formula for the variable cost per unit is:
[tex]\[ \text{Variable Cost per Gross-Ton Mile} = \frac{\text{Cost at High Activity} - \text{Cost at Low Activity}}{\text{High Activity Level} - \text{Low Activity Level}} \][/tex]
Substituting the values:
[tex]\[ \text{Variable Cost per Gross-Ton Mile} = \frac{40,312,500 - 22,375,000}{12,750,000 - 2,500,000} \][/tex]
[tex]\[ \text{Variable Cost per Gross-Ton Mile} = \frac{17,937,500}{10,250,000} \][/tex]
[tex]\[ \text{Variable Cost per Gross-Ton Mile} = 1.75 \][/tex]
Step 3: Calculate the Total Fixed Cost
To find the fixed cost, we use the total cost equation at either the high or low activity level:
[tex]\[ \text{Total Cost} = (\text{Variable Cost per Gross-Ton Mile} \times \text{Gross-Ton Miles}) + \text{Fixed Cost} \][/tex]
Using the high activity level data:
[tex]\[ 40,312,500 = (1.75 \times 12,750,000) + \text{Fixed Cost} \]\[ 40,312,500 = 22,312,500 + \text{Fixed Cost} \]\[ \text{Fixed Cost} = 40,312,500 - 22,312,500 \]\[ \text{Fixed Cost} = 18,000,000 \][/tex]
No More Pencils, Inc., disburses checks every two weeks that average $87,000 and take six days to clear. How much interest can the company earn annually if it delays transfer of funds from an interest-bearing account that pays 0.011 percent per day for these six days? Ignore the effects of compounding interest
Answer:
Interest $1,492.92
Explanation:
The company interest will be the amount of the checks multiplied by the number of days it will delay payment then multiply by the number of weeks that checks will be disbursed times the daily interest rate.
Interest = $87,000(6)(52 / 2)(.00011)
Interest =$522,000×26×0.00011
Interest = $1,492.92
Therefore $1,492.92 is the amount of interest that the company earn annually if it delays transfer of funds from an interest-bearing account that pays 0.011 percent per day for these six days.
Frick Road Paving Corporation is considering an investment in a curb-forming machine. The machine will cost $180,000, will last 10 years, and will have a $30,000 salvage value at the end of 10 years. The machine is expected to generate net cash inflows of $40,000 per year in each of the 10 years. Frick's discount rate is 10%. The net present value of the proposed investment is closest to:
Answer:
$77,348.98
Explanation:
The net present value is the present value of after tax cash flows from an investment less the amount invested.
NPV can be calculated using a financial calculator
Cash flow in year 0 = $-180,000
Cash flow each year from year 1 to 9 = $40,000
Cash flow in year 10 = $40,000 + $30,000 = $70,000
I =10%
NPV = $77,348.98
To find the NPV using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
I hope my answer helps you
To find the Net Present Value (NPV) of the curb-forming machine investment, we calculate the present value of the annual net cash inflows and the salvage value using the given discount rate, and then subtract the initial investment cost. This financial calculation helps assess the investment's profitability over the machine's life.
The question revolves around calculating the Net Present Value (NPV) of investing in a curb-forming machine by Frick Road Paving Corporation. To find the NPV, we must consider the initial investment cost, annual net cash inflows, the salvage value at the end of the machine's life, and the discount rate. The formula for NPV is:
NPV = (Sum of Present Value of Cash Inflows over n years) - Initial Investment
Using the given details:
Cost of the machine: $180,000Annual net cash inflow: $40,000 for each of 10 yearsSalvage value at the end of 10 years: $30,000Discount rate: 10%First, calculate the present value of annual cash inflows and the salvage value. Then, subtract the initial cost of the machine to get the NPV.The steps are as follows:
Calculate the present value (PV) of $40,000 annual inflows for each of the 10 years.Calculate the PV of the $30,000 salvage value.Sum these present values.Subtract the initial investment of $180,000 from this sum to find the NPV.This approach, using the given discount rate and cash flows, allows us to evaluate the investment's profitability accurately. It is important for businesses to use such financial metrics to make informed decisions regarding their capital investments.Let’s suppose you (USA dealer) imported a product from German on Dec 1, 2018 at € 300, payable in 60 days. You sold the product in the US market at $400 in cash on Dec 15, 2018. The company's fiscal year ends on Dec 31. You paid to your German supplier on Feb 1, 2019. Below, please find the exchange rate information: Dec 1, 2018: 1.2 €/$. Dec 31, 2018: 0.6 €/$. Feb 1, 2019: 1.0 €/$. What was gross profit for 2018 and 2019, respectively?
Answer:
- $140, -$120.
Explanation:
Okay, we are given the following parameters in the question above;
The value of the product imported from German on Dec 1, 2018 = € 300, payable = 60 days, the value of the product in the US market = $400 in cash on Dec 15, 2018 and the exchange rate are; Dec 1, 2018: 1.2 €/$, Dec 31, 2018: 0.6 €/$, Feb 1, 2019: 1.0 €/$.
Therefore, in the year 2018 we have that;
Purchase cost = €300 × 1.2 = $360.
Sales = $400.
Thus, the exchange loss = (1.2 - 0.6) × 300 = $180.
Therefore, the net income = sales - purchase cost - exchange loss.
The net income = $(400 - 360 - 180) = - $140.
Also, In the year 2019 we have that;
Exchange gain = (0.6 - 1) × 300 = -120.
Therefore, net income = -$120
The five forces of competitive pressures do not include 53) A) the bargaining power of suppliers and seller-supplier collaboration. B) the power and influence of social/demographic trends. C) the threat of new entrants into the market. D) the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry. E) the attempts of companies in other industries to win customers over to their own substitute products.
Answer:
B) the power and influence of social/demographic trends.
Explanation:
Porters five forces describe forces that exists in an industry and shapes that industry.
They include:
1. Competition among firms in the industry
2. Potential of new firms entering into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products
I hope my answer helps you
All of the above are part of the five forces of competitive pressure except B) the power and influence of social/demographic trends.
According to Michael Porter:
There are 5 forces of competitive pressure in an industry The forces of pressure dictate how successful a business will beAll options above are part of those pressures with the fifth being the power of buyers. The second option is not one of those forces but can also be quite influential.
In conclusion, option B is correct.
Find out more about the competitive forces at https://brainly.com/question/24881157.
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $17 per share dividend 10 years from today and will increase the dividend by 3.9 percent per year thereafter. If the required return on this stock is 12.5 percent, what is the current share price
Answer:
$68.48
Explanation:
We have a stock that pays no dividends for 9years. Once the stock begins paying dividends, it will have a constant growth rate of dividends. We can use the constant growth model at that point. It is important to remember that general constant dividend growth formula is:Pt= [Dt× (1 + g)] / (R− g)This means that since we will use the dividend in Year 9, we will be finding the stock price in Year 10. The dividend growth model is similar to the PVA and the PV of a perpetuity: The equation gives you the PV one period before the first payment. So, the price of the stock in Year 10 will be:P9= D10/ (R− g) = $17 / (12.5/100 − 3.9/100) = $197.67
The price of the stock today is simply the PV of the stock price in the future. We simply discount the future stock price at the required return. The price of the stock today will be:P0= $197.67/ 1.125^9= $68.48
Clampett, Inc., has been an S corporation since its inception. On July 15, 2020, Clampett, Inc., distributed $50,000 to J.D. His basis in his Clampett, Inc., stock on January 1, 2020, was $45,000. For 2020, J.D. was allocated $10,000 of ordinary income from Clampett, Inc., and no separately stated items. What is the amount of income J.D. recognizes related to Clampett, Inc., in 2020
Answer:
$5,000
Explanation:
Given:
Basis distribution = $50,000
Basis stock = $45,000
Ordinary income = $10,000
Computation of Capital gain:
Capital gain = Basis distribution - Basis stock - Ordinary income
Capital gain = $50,000 - $45,000 - $10,000
Capital gain = - $5,000
Computation of J.D. income related to Clampett = Ordinary income + Capital gain
Computation of J.D. income related to Clampett = $10,000 - $5,000
Computation of J.D. income related to Clampett = $5,000
Summit Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $65. If Summit Products requires a 25% return on sales to undertake production, what is the target cost for the new widget?
Answer:
$60
Explanation:
The computation of the target cost for the new widget is shown below:
Target selling price = $80
return on sales = 25%
Based on this
Profit per unit = 80 × 25%
= $20
Now
Target cost = Target selling price - Profit per unit
= $80 - $20
= $60
By deducting the profit per unit from the target selling price we can get the target cost and the same is applied and shown above i.e in the computation part
Final answer:
The target cost for the new widget, considering Summit Products' requirement for a 25% return on sales, is $67.50. However, since the current production cost is $65, which is below the target cost, the widget production is already meeting the company's profit criteria.
Explanation:
To calculate the target cost for the new widget, we first need to understand Summit Products' desired return on sales. They require a 25% return on the sales price of $90. To find the target cost, we subtract this desired return from the sales price.
The calculation is as follows:
Sales price per widget: $90Desired return on sales (25% of $90): $90 * 0.25 = $22.50Target cost: $90 - $22.50 = $67.50However, given that the question states the current cost to produce the widget is $65, which is below the calculated target cost, it implies that the production is already within Summit's required return on sales. Therefore, production of the widget at the current cost is feasible and profitable as per the company's financial criterion.
Simentec Inc., a tech support company, hasover 150 employees working infive countries. The company allows workers to work from anywhere, andvirtual meetings are the primary means of communication across the company.Simentec is a _________ structure—one whose members are geographically apartand work using information technology. It appears to customers as a single, unified organization with a real physical location.
Answer:
Virtual
Explanation:
A virtual structure refers to an organizational structure in which the employees are located in different places and work using the technology available like computers, e-mail and phone to complete their tasks and they achieve a strong cooperation between their members to work as a single entity. According to this, the answer is that Simentec is a virtual structure because the employees work from anywhere using virtual meetings to communicate and it appears as a unified organization.
Wildhorse Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, included product X. Relevant per-unit data for product X are as follows. Estimated selling price $49 Cost 39 Estimated selling costs 15 Normal profit 9 There were 990 units of product X on hand at December 31, 2020. Product X was incorrectly valued at $38 per unit for reporting purposes. All 990 units were sold in 2021. Compute the effect of this error on net income for 2020 and the effect on net income for 2021, and indicate the direction of the misstatement for each year.
Answer:
Net income for 2020 = $6,360 Overstated
Net income for 2021 = $6,360 Understated
Explanation:
The computation of net income for 2020 and the effect on net income for 2021 is shown below:-
Net realizable value per unit = Estimated selling price - Estimated selling expenses
= $49 - $15
= $34
Total value of ending inventory = 990 × $34
= $33,660
Incorrect value = 990 × $38
= $37,620
So, ending inventory of 2020 is overstated by
= $37,620 - $33,660
= $3,960
Overstatement of ending the inventory reduces the expense of the products sold and thereby raises the 2020 net profit by $3,960
The ending 2020 inventory is the beginning inventory for 2018. Overstatement of ending 2020 inventory leads to over establishment of beginning 2021 inventory. Increased beginning inventory results in higher cost of produced products and lower net profits.
Net income of 2021 is understated by $3,960
Net income for 2020 $6,360 Overstated
Net income for 2021 $6,360 Understated
3) Nerdware Corp. began a new software development project in 2017. The project reached technological feasibility on June 30, 2018, and was available for release to customers at the beginning of 2019. Development costs incurred prior to June 30, 2018, were $5,000,000 and costs incurred from June 30 to the product release date were $1,700,000. The 2019 revenues from the sale of the new software were $5,000,000, and the company anticipates additional revenues of $6,500,000. The economic life of the software is estimated at four years. Amortization of the software development costs for the year 2019 would be:
Answer:
$739,160.00
Explanation:
The amount of amortization recorded in 2019 would reflect the sales revenue made in 2019.
The appropriate way to calculate the amortization charge each year is to divide the year's revenue by total revenue expected from the software over the four-year period,then multiply by the cost incurred on the software from the day the project reached technological feasibility till the date of product release as shown below
% of cost amortized in 2019=$5,000,000/($5,000,000+$6,500,000)=43.48%
Amortization in 2019=43.48%*$1,700,000=$739,160.00
The cost incurred to the date of technological feasibility should be expensed to profit or loss account
Answer:
506.09
Explanation:
i think this is right
Daily Enterprises is purchasing a $ 10.4 million machine. It will cost $ 48 comma 000 to transport and install the machine. The machine has a depreciable life of five years using straight-line depreciation and will have no salvage value. The machine will generate incremental revenues of $ 4.2 million per year along with incremental costs of $ 1.1 million per year. Daily's marginal tax rate is 35 %. You are forecasting incremental free cash flows for Daily Enterprises. What are the incremental free cash flows associated with the new machine?
Answer:
The free cash flow for year 0 will be $ -10,448,000
The free cash flow for years 1–5 will be $2,746,360
Explanation:
Free Cash Flow for the Year 0
Free Cash Flow for the Year 0 = Cost of the Machine + Transportation + Installation Charges
= -$10,400,000 - $48,000
= -$10,448,000
Free cash flows for the Years 1 – 5
Incremental free cash flows =
[(Annual Sales - Costs) x (1 – Tax Rate)] + [Depreciation x Tax Rate]
= [($4,200,000 - $1,100,000) x (1 – 0.35)] + [($10,448,000 / 5 Years) x 0.35]
= [$3,100,000 x 0.65] + [$2,089,600 x 0.35]
= $2,015,000 + $731,360
= $2,746,360
Therefore the The free cash flow for year 0 will be $ -10,448,000 and the free cash flow for years 1–5 will be $2,746,360
Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:
Common stock—$20 par value, 100,000 shares authorized,
45,000 shares issued and outstanding $ 900,000
Paid-in capital in excess of par value, common stock 70,000
Retained earnings 400,000
Total stockholders' equity $ 1,370,000
In year 2017, the following transactions affected its stockholders’ equity accounts.
Jan. 1 Purchased 4,500 shares of its own stock at $15 cash per share.
Jan. 5 Directors declared a $4 per share cash dividend payable on February 28 to the February 5 stockholders of record.
Feb. 28 Paid the dividend declared on January 5.
July 6 Sold 1,688 of its treasury shares at $19 cash per share.
Aug. 22 Sold 2,812 of its treasury shares at $12 cash per share.
Sept. 5 Directors declared a $4 per share cash dividend payable on October 28 to the September 25 stockholders of record.
Oct. 28 Paid the dividend declared on September 5.
Dec. 31 Closed the $428,000 credit balance (from net income) in the Income Summary account to Retained Earnings.
Required:
1. Prepare journal entries to record each of these transactions for 2017.
2. Prepare a statement of retained earnings for the year ended December 31, 2017.
3. Prepare the stockholders' equity section of the company’s balance sheet as of December 31, 2017.
Prepare a statement of retained earnings for the year ended December 31, 2017. (Amounts to be deducted should be indicated by a minus sign.)
Answer and Explanation:
According to the scenario, computation of the given data are as follow:-
1. Journal Entries
On Jan 1
Treasury stock A/c ($15 × 4,500) Dr. $67,500
To Cash A/c $67,500
(Being the purchase of own shares is recorded)
On Jan 5
Retained earnings A/c Dr. {(45,000 - 4,500) × $4 } $162,000
To Dividends payable A/c $162,000
(Being the dividend payable is recorded)
On Feb 28
Dividends payable A/c Dr. $162,000
To Cash A/c $162,000
(Being the dividend is paid)
On July 6
Cash ($19 × 1,688) Dr. $32,072
To Treasury stock A/c ($15 × 1,688) $25,320
To paid in capital in excess of treasury stock A/c $6,752 (Being the sale of treasury shares is recorded)
On Aug 22
Cash A/c ($12 × 2,812) Dr. $33,744
Paid in capital in excess of par-treasury stock Dr. $6,752
Retained earnings Dr. $1,684
To Treasury stock A/c ($15 × 2,812) $42,180
(To Record the sold treasury shares)
On Sep 5
Retained earnings A/c($4 × 45,000) Dr. $180,000
To Dividends payable A/c $180,000
(Being the dividend is declared)
On Oct 28
Dividends payable A/c Dr. $180,000
To Cash A/c $180,000
(Being the dividend is paid)
On Dec 31
Income summary Dr. $428,000
To Retained earnings A/c $428,000
(Being the income summary account is closed)
2. Statement of Retained Earnings
Particular Amount($) Total Amount($)
Opening balance $400,000
Add - Net income $428,000 $828,000
Less - treasury stock $1,684
Less - cash dividend $342,000 ($343,684)
Closing balance $484,316
3. Stockholders Equity Section of the Balance Sheet
Particular Amount ($)
Common stock $900,000
Add - Paid in capital in excess of par-common stock $70,000
Total contributed capital $970,000
Add - Retained earnings $484,316
Total equity of stockholders 1,454,316
This answer provides the necessary journal entries for Kohler Corporation's 2017 transactions and prepares a statement of retained earnings and the stockholders' equity section for December 31, 2017. It details changes in common stock, paid-in capital, retained earnings, and treasury stock transactions. The final stockholders' equity is calculated based on these activities.
Kohler Corporation reports the following components of stockholders’ equity on December 31, 2016:
Common stock—$20 par value, 100,000 shares authorized, 45,000 shares issued and outstanding $900,000
Paid-in capital in excess of par value, common stock $70,000
Retained earnings $400,000
Total stockholders' equity $1,370,000
In 2017, several transactions affected its stockholders’ equity accounts. Below are the journal entries for each transaction:
Journal Entries
Jan. 1: Purchased 4,500 shares of its own stock at $15 cash per share.Statement of Retained Earnings
For the year ended December 31, 2017
Retained Earnings, January 1, 2017: $400,000
Add: Net Income $428,000
Less: Dividends ($324,000)
Retained Earnings, December 31, 2017: $504,000
Stockholders' Equity Section
As of December 31, 2017:
Common Stock $900,000
Paid-in Capital in Excess of Par Value $70,000
Retained Earnings $504,000
Total Stockholders' Equity $1,474,000
A personal business letter is written by an individual to a company for resolving issues related to an unexpected error on a bill, for refunding of defected products, or poor services. So, assuming you are complaining with XYZ Company, write a professional Complaint Letter. To XYZ Company?
Answer:
See the explanation below.
Explanation:
62, Charlton Street,
Ibadan, Oyo State,
Nigeria.
14 May 2020.
The Accounting Officer,
XYZ Company,
Ibadan, Oyo State,
Nigeria.
Dear Sir,
Complaint Lodgment Over an Unexpected Error in My Bill
This is to bring to your notice an unexpected error of $9 over charge in the consumable items I purchased from your store yesterday, 13 May 2020.
From my recalculation of the total amount for the purchased item, I could observed that the error was due to a transposition of figure by your cashier; he charged me a total sum of $76 instead of $67.
Copies of the invoice and the payment receipt for the items are hereby attached to this letter for your verification. After your verification, kindly get back to me so that I can come to your office for the refund.
I look forward to receiving your usual timely response.
Yours sincerely,
Amcool.
Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (7,100 units) $ 326,600 Variable expenses 184,600 Contribution margin 142,000 Fixed expenses 103,500 Net operating income $ 38,500 If the company sells 7,000 units, its net operating income should be closest to: (Do not round intermediate calculations.)
Answer:
Instructions are below.
Explanation:
Giving the following information:
Sales (7,100 units) $ 326,600
Variable expenses 184,600
Contribution margin 142,000
Fixed expenses 103,500
Firsts, we need to calculate the selling price and unitary varaible cost:
Selling price= 326,600/7,100= $46
Unitary variable cost= 184,600/7,100= $26
For 7,000 units:
Sales= (7,000*46)= 322,000
Variable cost= (7,000*26)= (182,000)
Total contribution margin= 140,000
Fixed costs= (103,500 )
Net operating income= 36,500
The accountant for Mandarin Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $ 1,029,000 Net income for the year 335,000 Cash dividends declared for the year 63,000 Retained earnings balance at the end of the year 1,637,000 Cash dividends payable at the beginning of the year 14,200 Cash dividends payable at the end of the year 17,300 What is the amount of cash dividends paid that should be reported in the financing section of the statement of cash flows
Answer:
$59,900
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
The movement in the dividend payable account may be expressed mathematically as
Opening balance + Dividend declared - Dividend paid = Closing balance
$14,200 + $63,000 - Dividend paid = $17,300
Dividend paid
= $14,200 + $63,000 - $17,300
= $59,900
Answer:
$59,900
Explanation:
Base on the scenario been described in the question, we can use the following method to solve the given problem
The movement in the dividend payable account is given as
Opening balance + Dividend declared - Dividend paid = Closing balance
Substituting the values we have
$14,200 + $63,000 - Dividend paid = $17,300
Making dividend paid the subject of formula we have
Dividend = $14,200 + $63,000 - $17,300
Dividend paid = $59,900
As the answer
On September 1, Advantage Maintenance Company contracted to provide monthly maintenance services for the next five months at a rate of $3,000 per month. The client paid Advantage $15,000 on September 1. The maintenance services began on that date. Assuming Advantage records deferred revenues using the alternative treatment, what would be the adjusting entry recorded on December 31?
Answer:
Adjusting Entry
December 31,
Dr. Service Revenue $3,000
Cr. Unearned Revenue $3,000
Explanation:
Using alternate treatment the cash received in advance is recorded as the revenue initially.
On September following entry was performed
Dr. Cash $15,000
Cr. Revenue $15,000
At the end of the year services of 4 months have been performed and the amount of one month's service is received in advance until this date. It needs to be adjusted according to the accrual concept.
Final answer:
The adjusting entry on December 31 for Advantage Maintenance Company, which uses the accrual basis of accounting, would involve debiting Deferred Revenue and crediting Service Revenue by $12,000 to recognize four months of services provided from a $15,000 prepayment.
Explanation:
The student's question pertains to recording an adjusting entry for deferred revenues in accordance with accrual accounting principles. Advantage Maintenance Company received payment in advance for services to be provided over a five-month period. They must recognize revenue each month as the service is performed. By December 31, four months of services will have been provided. Therefore, they would need to record the revenue earned for these four months.
The adjusting entry on December 31 would be:
Debit Deferred Revenue for $12,000 (which is $3,000 per month imes 4 months)
Credit Service Revenue for $12,000
This reflects that $12,000 of the services have now been performed, and should be recognized as revenue, reducing the remaining deferred revenue to $3,000, which will be recognized the following month when the last portion of the service is performed.
Which of the following statements about value is FALSE? a. Value is critical to maintaining long-term customer relationships. b. Value, unlike quality, means the same thing to all customers. c. Value includes the concept of quality, but it is broader in scope. d. Value takes into account every marketing program element. e. Value allows for the necessary balance among the five types of utility.
Answer:
Value, unlike quality, means the same thing to all customers.
Explanation:
Value refers to the benefits a customer receive from a product or service compared to its costs. As the value refers to the perception the customers have and every person has different needs, different people will assign a distinct value to the same product. According to that, the answer is that the statement about value that is false is that value, unlike quality, means the same thing to all customers.
The other options are true because if the customer feels that the product offers value, he/she will maintain a long-term relationship. Also, value refers to the quality of a product relative to the price and the marketing program elements describe what the company has to do to create value to customers. Moreover, the five types of utility are used together to develop a solution that generates value.
The FALSE statement about value is "Value, unlike quality, means the same thing to all customers". Hence, option B is the correct answer.
Value and quality are related concepts, but have different meanings and interpretations for different customers. While quality refers to the inherent characteristics and excellence of a product or service, value is subjective and varies from customer to customer.
Value encompasses not only quality but also factors such as price, features, benefits, and customer satisfaction.
Option b states that value means the same thing to all customers, which is not true. Different customers may prioritize different aspects when evaluating value, such as price sensitivity, specific features, or personal preferences.
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Consider a $1,000 par value bond with a 9% annual coupon. The bond pays interest annually. There are 20 years remaining until maturity. You have expectations that in 5 years the YTM on a 15-year bond with similar risk will be 7.5%. You plan to purchase the bond now and hold it for 5 years. Your required return on this bond is 10%. How much would you be willing to pay for this bond today
Final answer:
To determine the price you are willing to pay for the bond today, you must calculate the present value of the annual coupon payments for the next 5 years and the present value of the expected sale price in 5 years, all discounted at your required return of 10%.
Explanation:
To price the bond you are considering purchasing today, we'll need to discount the cash flows from the bond (the annual coupon payments and the expected sale price in 5 years) back to the present using your required return of 10%. First, we calculate the present value of the annual coupon payments you would receive for the next 5 years. The bond has a 9% annual coupon on a $1,000 par value, which equals $90 per year. Next, we have to estimate the sale price of the bond in 5 years, assuming that the YTM will then be 7.5%. This is equivalent to finding the present value of the remaining cash flows (15 years of $90 coupons plus the $1,000 par value at maturity) discounted at the new YTM of 7.5%. Finally, we sum the present value of the 5 years' worth of coupon payments and the present value of the price we expect to sell the bond for after 5 years, both discounted at your required return of 10%.
To calculate this precisely requires use of the present value formula for an annuity and a complex calculation for the sale price in 5 years, which is beyond the scope of this explanation but is usually done using financial calculators or spreadsheet software.
Elliott Corp.'s transactions for the year ended December 31, 2020 included the following: Purchased real estate for $1,250,000 cash which was borrowed from a bank. Sold available-for-sale securities for $1,000,000. Paid dividends of $1,200,000. Issued 500 shares of common stock for $500,000. Purchased machinery and equipment for $250,000 cash. Paid $900,000 toward a bank loan. Reduced accounts receivable by $200,000. Increased accounts payable $400,000. Elliott's net cash used in investing activities for 2020 was a. $1,500,000 b. $ 500,000 c. $ 750,000 d. $ 250,000
Answer:
b. $ 500,000
Explanation:
The computation of the net cash used in investing activities is shown below:
Cash flow from investing activities
Purchased real estate -$1,250,000
Purchased machinery and equipment -$250,000
Sold available-for-sale securities for $1,000,000
Net cash used by investing activities -$500,000
The negative sign represents the cash outflow and the positive sign represents the cash inflow and the same is to be considered
The Phelan Division produces and sells a product to external and internal customers. Per-unit information about its operations include: Selling price per unit to external customers $250 Variable manufacturing costs per unit 115 Fixed manufacturing overhead costs per unit 70 If Phelan is operating at capacity and has unlimited external customer demand, what should be the (internal) transfer price for Phelan's product
Answer:
The answer is $250
Explanation:
Solution
From the example given, we are asked to find the internal transfer price of Phelan's product.
So, if Phelan is operating at capacity or speed and has unlimited external customer demand then the transfer price for Phelan's product is $250 as it has huge demand from customers
Cullumber Company had a 40 percent tax rate. Given the following pre-tax amounts, what would be the income tax expense reported on the face of the income statement? Sales revenue $ 1100000 Cost of goods sold 617000 Salaries and wages expense 80400 Depreciation expense 119000 Dividend revenue 89500 Utilities expense 10600 Discontinued operations loss 99100 Interest expense 19200
Answer:
$101,520
Explanation:
Income statement will be made as follows:
$
Sales Revenue 1100000
Less: COGS (617000)
Gross Profit 483000
Less: Salaries & Wages (80400)
Less: Depreciation exp. (119000)
Less: Utilities exp. (10600)
Less: Interest expense (19200)
Earning before tax 253800
Less: Tax(40%) (101520)
Hope this helps.
Good luck buddy.
Final answer:
The income tax expense for Cullumber Company is calculated by applying the 40 percent tax rate to its taxable income, which is deduced by subtracting all allowable expenses from its sales revenue.
Explanation:
The question asks about calculating the income tax expense for Cullumber Company that will be reported on its income statement. The company has a fixed 40 percent tax rate. To calculate the income tax expense, we need to determine the company's taxable income. The taxable income is obtained by subtracting all allowable deductions, including the cost of goods sold (COGS), salaries and wages, depreciation, utilities, and interest expenses, from the sales revenue. Dividend revenue is generally considered an addition to income and the discontinued operations loss can be deducted.
Income tax expense is then calculated by applying the 40 percent tax rate to the taxable income. In this particular situation, specific calculations are not provided, as the student is supposed to use the given pre-tax amounts to find the correct taxable income and then apply the tax rate to find the income tax expense.
The effective tax rate and understanding of how income taxes work for corporations is crucial in business education, especially for students in finance or accounting. The mentioned tax policies and effective tax rates provide a general context for how corporate incomes are taxed in practice.
Under U.S. laws: A. Only private workers have the right to hold an election to choose what union they want to represent them, if any.B. Only public workers have the right to hold an election to choose what union they want to represent them, if any.C. Most private and public workers have the right to hold an election to choose what union they want to represent them, if any.D. Only the employer has the right to hold an election to choose what unions they want to represent the workers within the organization, if any.
Answer:
C) Most private and public workers have the right to hold an election to choose what union they want to represent them, if any.
Explanation:
An employee is generally not required to join a union even, in most cases if a union exists and it has an agreement with the employer regarding employees joining it, the most it can do is charge everyone the union fees. This means that the employees are required to pay union fees even if they do not want to join the union. Full union membership cannot be required.
Also, employees are free to decide in an election to what union they want to belong to, or if they want to belong to any type of union at all. E.g. most of the employees from foreign car manufacturers have chosen not to join the UAW union (Toyota, Honda, Mercedes Benz, BMW, etc.).
Riley Company promises to pay Janet Anderson or her estate $150,000 per year for the next 10 years, even if she leaves the company or passes away to try to induce her to stay with the company. Riley Company wants to properly record this transaction as deferred compensation, but is unsure how to record the cost. In addition, Riley Company purchased a whole life insurance policy for Janet, naming the company as the beneficiary. Riley Company wants to determine if it can offset the cash surrender value of the life insurance policy against the deferred compensation liability.
a. summarize the background of your case and indicate any assumptions that you are making regarding the case. Define your problem statement and research question(s).b. identify the key terms in your case, and state why you believe each is relevant to your case.c. Gather data from multiple sources and present that data in one to two pages Document your sources.d. Organize and interpret the findings of your research in one to two pages.
Answer:
Explanation:
The $ 150,000 per year to be paid each year for the next 10 years by Riley Company to Janet Anderson should be recorded as a deferred compensation liability. The present value of the annual payments should be calculated.
The borrower in a $238,000 loan makes interest payments at the end of each six months for eight years. These are computed using an annual effective discount rate of 6.5%. Each time he makes an interest payment, the borrower also makes a deposit into a sinking fund earning a nominal interest rate of 4.2% convertible monthly. The amount of each sinking fund deposit is D in the first three years and 2D in the remaining five years, and the sinking fund balance at the end of the eight years is equal to the loan amount. Find D.
Answer:
D = 7980.55
Explanation:
Since the borrower pays in 6 months wich is half a year, we calculate the semi-annual rate = [tex]\frac{Annual rate of intrest}{Number of months}[/tex]
= [tex]\frac{0.042}{12}[/tex]
= 0.0035 = 0.35%
The effective semi-annual rate is, [(0.0035)⁶- 1] = 0.02118461
[tex]\frac{D[(1.02118461)^{16} - 1]}{1.02118461) - 1}[/tex] + [tex]\frac{D[(1.02118461)^{10} - 1]}{1.02118461) - 1}[/tex] = 238000
[tex]\frac{D(1.398518 - 1)}{0.02118461}[/tex] + [tex]\frac{D(1.233226 - 1)}{0.02118461}[/tex] = 238000
0.631744D = 238000 * 0.02118461
0.631744D = 5041.937
Therefore D = 7980.55
SInking funds are the funds or the money that is kept aside by the company for paying off future debts or bonds. This amount cannot be sed for any other payments. This helps in balancing the financial economy of the entity.
The value of D is $7,980.55
Computation:
Given:
Loan amount =$238,000Interest payment period =semi annual rateannual effective discount rate =6.5%nominal interst rate convertible monthly =4.2%Computation of effective semi-annual interest rate:
[tex]\text{Effective semi-annual interest rate}=(\dfrac{\text{Nominal Interest rate}}{\text{Number of month}})^\text{Payment period}-1\\\\=(\dfrac{0.042}{12})^6-1\\\\=(0.035)^6-1\\\\=0.02118\;\text{or}\;2.12\%[/tex]
The value of D will be computed based upon the total loan payment formula:
[tex]\begin{aligned} \text{Loan}&=\dfrac{\text{D(1+i)}^\text{n}-1}{(1+\text{i}-1)}\\&+\dfrac{\text{2D(1+i)}^\text{n}-1}{(1+\text{i}-1)}\\\$238,000&=\dfrac{\text{D}(1+0.02118)^{16}-1}{(1+0.02118)-1}+\dfrac{\text{2D}(1+0.02118)^{16}-1}{(1+0.02118)-1}\\\$238,000\times0.02118&=0.63174\text{D}\\\text{D}&=\$7,980.55\end{aligned}[/tex]
were,
D is sinking fund deposit
i is the effective interest rate
n is the number of payment period
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Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $154,500, allowance for doubtful accounts of $1,165 (credit) and sales of $1,175,000. If uncollectible accounts are estimated to be 0.5% of sales, what is the amount of the bad debts expense adjusting entry?
Answer:
$4,710
Explanation:
The computation of bad debts expense adjusting entry is shown below:-
Bad debts expense adjusting entry = Sales + Uncollectible allowances - Balance in allowance for doubtful accounts
= ($1,175,000 × 0.5%) - $1,165
= $5,875 - $1,165
= $4,710
Therefore for computing the bad debts expense adjusting entry we simply applied the above formula.
The adjusting entry is shown below:-
Bad Debt A/c Dr, $4,710
To Allowance for Doubtful Debts $4,710
(Being bad debt account is recorded)
Computing Gross Profit The following data were taken from the accounts of Fluter Hardware, a small retail business. Sales $120,000 Sales returns and allowances 900 Sales discounts 650 Merchandise inventory, January 1 35,000 Purchases during the period 77,600 Purchases returns and allowances during the period 4,100 Purchases discounts taken during the period 2,300 Freight-in on merchandise purchased during the period 1,250 Merchandise inventory, December 31 32,000 Determine the gross profit.
Answer:
$43,000
Explanation:
The gross profit is the difference between the sales revenue and the cost of good sold. Net sales is the sales less returns and allowances. Similar to net sales is net purchases which is the gross purchase net the allowances and returns.
Net sales
= $120,000 - $900 - $650
= $118,450
The movement in the balance of inventory at the start and end of a period is as a result of sales and purchases. While sales reduces the balance in inventory, purchases increases the balance. This may be expressed mathematically as
Opening balance + purchases - cost of goods sold = closing balance
net purchases = $77,600 - $4100 - $2300 + $1250
= $72,450
therefore,
$35000 + $72,450 - cost of goods sold = $32000
Cost of goods sold = $35000 + $72,450 - $32000
= $75,450
Gross profit = $118,450 - $75,450
= $43,000
. Homer Simpson wins a lottery prize. As a result, the Simpson family increases its consumption by $1,000 at each level of after-tax income. ("Income" does not include the prize money.) How does this change affect their consumption function?
Answer:
Their consumption function would shift upwards
Explanation:
Their consumption function shifts upward because the lottery prize has given them an autonomous consumption of $1000. This prize is independent of income. At each level of income, consumption rises by $1000. Causing consumption spending to be shifted upward by $1000. The marginal propensity to consume is unaffected because increase in consumption is the same at each level of disposable income.
Ceramics produces large planters to be used in urban landscaping projects. A special earth clay is used to make the planters. The standard quantity of clay used for each planter is 24 pounds. The company uses a standard cost of $ 2.15 per pound of clay. Lily produced 3,000 planters in May. In that month, 75,000 pounds of clay were purchased and used at the total cost of $ 153,000. Requirement 1. Calculate the direct material price variance. Begin by determining the formula for the price variance, then compute the price variance for the direct materials. 2. Calculate the direct material quantity variance. Determine the formula for the quantity variance, then compute the quantity variance for the direct materials.
Answer:
Instructions are below.
Explanation:
Giving the following information:
The standard quantity of clay used for each planter is 24 pounds. The company uses a standard cost of $ 2.15 per pound of clay. Lily produced 3,000 planters in May. In that month, 75,000 pounds of clay were purchased and used at the total cost of $ 153,000.
To calculate the direct material price and quantity variance, we need to use the following formulas:
Direct material price variance= (standard price - actual price)*actual quantity
Actual price= 153,000/75,000= $2.04
Direct material price variance= (2.15 - 2.04)*75,000
Direct material price variance= $8,250 favorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Standard quantity= 3,000*24= 72,000 pounds
Direct material quantity variance= (72,000 - 75,000)*2.15
Direct material quantity variance= $6,450 unfavorable