Carlin and Marley, an accounting firm, provides consulting and tax planningservices. For many years, the firm's total administrative cost (currently$270,000) has been allocated to services on this basis of billable hours toclients. A recent analysis found that 55% of the firm's billable hours to clientsresulted from tax planning services, while 45% resulted from consultingservices.The firm, contemplating a change to activity-based costing, has identifiedthree components of administrative cost, as follows:
Staff Support $200,000
In-house computingcharges 50,000
Miscellaneous officecosts 20,000
Total $270,000
A recent analysis of staff support found a strong correlation with the numberof clients served. In contrast, in-house computing and miscellaneous officecost varied directly with the number of computer hours logged and number ofclient transactions, respectively. Consulting clients served totaled 35% of thetotal client base, consumed 30% of the firm's computer hours, and accountedfor 20% of the total client transactions.
Answer:
The amount of administrative cost chargeable to tax planning services would decrease by $32,500
Note: Kindly find an attached copy of the complete question below
Explanation:
Solution
Given that:
In this example, the total cost of administrative charged to tax planning services is given as =$270,000 * 55%
=$148,000
Now,
The activity based cost system is shown below:
Cost Amount Cost driver Consulting Tax planning
Staff support 200,000 No of clients served 35% 65%
In house com-
puting charges 50,000 Computers hrs logged 30% 70%
Misc office
Cost 20,000 No of clients
Transaction 20% 80%
Total $270,000
Thus,
Activity Workings Allocated to tax planning services
Staff support 200,000 * 65% 130,000
In house Comp-
uting Charges 50,000 * 70% 35,000
Misc office costs 20,000 * 80% 16,000
The total cost
allocated $181,000
So, the change in amount allocated to tax planning services under this system is = $181,000-$148,500
= $32,500
Fredrick works for Vision, a billboard advertising agency, which hires billboards from owners on behalf of clients. Fredrick routinely accepts pay- offs from billboard owners in exchange for referring their billboards to clients. This behaviour could result in his dismissal from Vision, if found out. Which statement is Fredrick most probably utilizing to rationalize his actions?
a. "It's not really illegal."
b. "It's in everyone's best interests."
c. "No one will ever know about it."
d. "The organization will stand behind me."
e. "I cannot be held responsible."
Answer:
B. It is in everyone's best interests
Explanation:
Fredrick works for Vision, a billboard advertising agency. This agency specializes in hiring billboards from owners on behalf of clients. Simply put, Vision, an advertising agency, matches the need of its clients with the provision of billboards obtained from owners of such.
Fredrick works for the firm, and the implication is that, he's an agent of the agency firm, and the advertising firm is the Principal. The action of Fredrick routinely accepting pay-offs from the billboards owners contravenes this arrangement. Fredrick is thus acting parallel in line with his Principal.
It is thus worthy of note that Fredrick could only rationalize this action because he believes he is servicing the needs of the advertising agency and also the billboards owners. In his wisdom, everyone's objective is being made, bar the moral implications and obligations.
So, among the options enlisted, option B is the plausible answer.
You plan to borrow $ 4 comma 000 from a bank. In exchange for $ 4 comma 000 today, you promise to pay $ 4 comma 160 in one year. What does the cash flow timeline look like from your perspective? What does it look like from the bank's perspective?
Answer:
Please check the attached image for the diagram
Explanation:
I would be borrowing $4000 from the bank. I would be $4,000 richer and the bank would have $4000 less.
In one year, I would be paying the bank $4160. So I would have $4160 less and the bank would be $4160 richer.
A negative sign indicates cash outflow and a positive sign indicates a cash inflow.
I hope my answer helps you.
Concord Company, a machinery dealer, leased manufacturing equipment to Mays Corporation on January 1, 2017. The lease is for a 7-year period and requires equal annual payments of $26,143 at the beginning of each year. The first payment is received on January 1, 2017. Concord had purchased the machine during 2016 for $75,000. Collectibility of lease payments is reasonably predictable, and no important uncertainties surround the amount of costs yet to be incurred by Concord. Concord set the annual rental to ensure an 8% rate of return. The machine has an economic life of 8 years with no residual value and reverts to Concord at the termination of the lease.
Compute the amount of the lease receivable.
Answer:
$ 146,998.94
Explanation:
The applicable formula in this case is the present of annuity due.The amount of annual lease rental needs to be stated to present value equivalence by discounting all future cash flows of lease rentals to today's equivalent worth.
PV=PMT*(1/i-1/i(1+i)^n)*(1+i)
i is the rate of return of 8% OR 0.08
n is the number of years which is 7
PMT is the yearly lease rental of $26143
PV=26143*(1/0.08-1/0.08(1+0.08)^7)*(1+0.08)
PV=26143*(1/0.08-1/0.137106)*(1+0.08)
PV=26143*(12.5-7.293629941 )*(1.08)
PV=26143*5.206370059 *1.08
PV= 146,998.94
A perfectly competitive industry's market price is found by finding the point on the market demand curve where the largest number of units will be purchased. Correct Answer locating the intersection of the market demand and market supply curves. You Answered the horizontal summation of all the industry firms' individual supply curves. identifying the price at which each firm realizes its largest economic profit.
Answer: locating the intersection of the market demand and market supply curves.
Explanation:
Here is the complete question:
A perfectly competitive industry's market price is found by:
a. locating the intersection of the market demand and market supply curves.
b. the horizontal summation of all the industry firms' individual supply curves.
c. identifying the price at which each firm realizes its largest economic profit.
d. finding the point on the market demand curve where the largest number of units will be purchased.
A perfectly competitive market is a form of market that is characterized by many buyers and sellers, no transaction costs, undifferentiated products, no barriers to entry and exit, perfect information about price of a good etc. The total revenue for a firm in perfectly competitive market is calculated by multiplying the price and quantity.
The market price in perfectly competitive market is gotten and determined by interaction of the forces of the market demand and market supply. The market demand is the sum of the quantity demanded by the buyers at different prices.
Assume that the custodian of a $450 petty cash fund has $62.50 in coins and currency plus $382.50 in receipts at the end of the month. The entry to replenish the petty cash fund will include:
Answer:
All receipts for petty cash A/c Dr. $382.50
Cash over and short A/c Dr. $5
To Cash A/c $387,50
(Being the replenish the petty cash fund is recorded)
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the total receipts and coins by using following formula:-
Total Receipts and Coin = Coins in Cash Fund + Currency Plus in Receipts = $62.50 + $382.50
= $445
Shortage of Petty Cash Account is
= Total Receipts and Coin - assume Custodian of a Petty Cash
= $445 - $450
= - $5
Journal Entry:-
All receipts for petty cash A/c Dr. $382.50
Cash over and short A/c Dr. $5
To Cash A/c $387,50
(Being the replenish the petty cash fund is recorded)
For recording this we debited the petty cash receipts as it increased the assets and credited the cash as it decreased the assets and the balancing is transferred to cash short and over
A company currently makes a component used in production. The per unit costs incurred to make the component include: Direct materials: $5; Direct labor: $2; Overhead: $4; Total cost: $11. Twenty-five percent of the overhead costs are considered incremental. The company can purchase the component from another source for $10. The company should do which of the following?
A. The company should not make the components because incremental costs are $2 less than the purchase price.
B. The company should make the components because incremental costs are $2 less than the purchase price.
C. None of above
Answer:
The company should make the components because incremental costs are $2 less than the purchase price.
Explanation:
To solve this we would have to calculate the cost of making each unit of the component.
= Direct Labour + Direct Material + Overhead*
25% of Overhead is said to be Incremental. Overhead is 4. This means that 25% of 4 is the Marginal Cost of production. i.e, the cost per unit.
= 25% * 4
= (25/100) x 4
= 1
We would charge $1 per unit to overhead costs.
Therefore, the cost of making each unit of component
= $5 + $2 + $1 = $8
Since the cost of purchasing each unit of component is $10. Then the company has to produce the component because it is less with a difference of $2.
$10 - $8 = $2
Additional Information: Net income for 2020 was $26,890. Land was sold for cash at a loss of $2,000. Cash dividends were paid during the year. Equipment was purchased for cash. In addition, equipment costing $40,000 with a book value of $13,000 was sold for $14,000 cash. What is the cash flow from operating activities? Group of answer choices $85,290 $86,290 $108,290 $84,290
Answer:
The question is wrong ,find attached correct question:
The correct option in the attached is $58290 ,option E,which is missing in the original question
Explanation:
Cash flow from operating activities=net income+depreciation charge-increase in accounts receivable+decrease in inventory+decrease in prepaid expenses-decrease in accounts payable+loss on sale of land-gain on sale of equipment
cash flow from operating activities=$26,890+($135,000-$92,000)-($77,000-$64,000)+($140,000-$132,000)+($16,540-$12,140)-($45,000-$33,000)+$2000-$1000=$58290
Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700, The company paid $18,000 cash in dividends to the owner (sole stockholder). The retained earnings account before closing had a balance of $297,000. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is:
Answer:
The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed is:
Debit Income Summary Account $63,300
Credit Retained Earnings $63,300
To close the income summary account.
Explanation:
a) Closing entries are made to close the temporary (Income Summary) accounts so that only the permanent (balance sheet) accounts remain. Temporary accounts are period accounts whose balances are taken to the income summary account. They are not carried over to the next accounting period, except the net financial performance result, known as the net income, which adjusts the Retained Earnings.
On June 30, Setzer Corporation had a market price of $14 per share of common stock. For the previous year, Setzer paid an annual dividend of $0.98. Compute the dividend yield for Lucas Corporation. %
Answer:
Dividend Yield = 7%
Explanation:
The dividend yield is the proportion of the market price that is earned as dividend. The higher the dividend yield the better for the investor.
The dividend yield is calculated as follows:
Dividend yield = Dividend paid /market price per share × 100
= 0.98/14×100 =7 %
Dividend Yield = 7%
The balanced-budget multiplier is a measure of the short-run change in aggregate output caused by equal changes in government purchases and taxes. Ignoring any supply-side or long-run effects, if the government simultaneously increases both taxes and government spending by $100 billion, what is the expected short-run impact on GDP? Group of answer choices GDP does not change. GDP increases by less than $100B. GDP decreases by less than $100B. GDP increases by $100B. GDP decreases by $100B.
Answer: GDP increases by $100B
Explanation:
The Balanced Budget Multiplier is used to.measure the effect of a simultaneous increase in Government Spending and Taxes on the Economy.
While Classical Theorists believed that they cancel each other out, Keynesian Economists went about proving that this was not the case.
They showed that an increase in Government Spending had a ripple effect that was not curtailed by increasing taxes.
What they found out was that, increasing Government Spending at the same rate as taxes led to a rise in National income that was the same as the amount that Government Spending increased by.
This means that an increase in Government Spending and tax of $100 billion will lead to an increase in Income of $100 billion as well which will be translated into the GDP.
Three different companies each purchased trucks on January 1, 2018, for $62,000. Each truck was expected to last four years or 250,000 miles. Salvage value was estimated to be $2,000. All three trucks were driven 80,000 miles in 2018, 55,000 miles in 2019, 51,000 miles in 2020, and 70,000 miles in 2021. Each of the three companies earned $53,000 of cash revenue during each of the four years. Company A uses straight-line depreciation, company B uses double-declining-balance depreciation, and company C uses units-of-production depreciation. Answer each of the following questions. Ignore the effects of income taxes.
Calculate the net income for 2021? (Round "Per Unit Cost" to 3 decimal places.)
Answer:
Net Income Calculation for 2021
Company A Company B Company C
Revenue $53,000 $53,000 $53,000
Less Depreciation Expense ($15,000) ($0.00) ($16,800)
Net Income / (Loss) $38,000 $53,000 $36,200
Explanation:
Company A
Depreciation Expense (Straight line) : (Cost - Salvage Value) / Number of Useful Life
2021 = ($62,000-$2,000) / 4
= $15,000
Company B
Depreciation Expense (Double Declining Balance) : 2 × SLDP × BVSLD
SLDP = 100/ 4
= 25%
2018 = 2 × 25% × $62,000
= $ 31,000
2019 = 2 × 25% × ($62,000 - $ 31,000)
= $ 15,500
2020 = 2 × 25% × ($62,000 - $ 31,000 - $ 15,500 )
= $ 7,750
2021 = 2 × 25% × ($62,000 - $ 31,000 - $ 15,500 - $ 7,750 )
= 0
In 2021 depreciation will only be allowed where:
Book Value = Salvage Value
Test to see if Book Value has fallen below Salvage Value :
Cost $62,000
Less Accumulated depreciation $54,250
Book Value $ 7,750
Company C
Depreciation Expense (units-of-production) : (Cost - Salvage Value) × Period`s Production / Total Expected Production
2021 = ($62,000-$2,000) × 70,000/ 250,000
= $16,800
Net Income Calculation for 2021
Company A Company B Company C
Revenue $53,000 $53,000 $53,000
Less Depreciation Expense ($15,000) ($0.00) ($16,800)
Net Income / (Loss) $38,000 $53,000 $36,200
The monthly salaries for December and the year-to-date earnings of the employees of Bush Consulting Company as of November 30 follow. Determine the amount of social security tax to be withheld from each employee’s gross pay for December. Assume a 6.2 percent social security tax rate and an earnings base of $122,700 for the calendar year. (Round your final answers to 2 decimal places.)
Answer:
The social security tax rate for the employees is show below
Thus, for the employee 3 = 10709 + 117799 = 128, 508 which is above the base
Explanation:
Solution
Given that:
Employee: 1 2 3 4
December Salary : $9900 $10,000 $10709 $10,000
Year of date earnings
Through November 30: $99,000 $70,000 $117799 $100000
Social sec taxable
Earnings December: 9900 10,000 4901 10,000
Social security tax 6.2%: 613.80 620 304 620
Now,
For the employee 3 = 10709 + 117799 = 128, 508 which is above the base
Thus,
$128,508 - $122, 700
=5808 ( this earning is not taxable)
Hence, 10709 -5808 = 4901 (this is a taxable earning).
KYG Instruments, a firm that produces manufacturing equipment for various industries, experiences an influx of new sales employees due to a recent expansion. Despite possessing a vast amount of sales experience, most of the new employees perform poorly. This is because the new recruits possess inadequate technical knowledge about the products sold by KYG. To address the issue, the HR department is considering implementing a training program. As part of the process, the HR department's first step should be to:
Answer:
Identify what the sales representatives will need to learn.
Explanation:
Before the laying out the plan of training the most important thing is that the HR department has to analyze and identify what are the skills that they must develop through the training program which will be as per the requirement of the firm. So in the KYG training program, the first step is to identify analyze the skill sets required for the sales representatives that would be taught them.
Wildhorse Corporation has retained earnings of $677,000 at January 1, 2020. Net income during 2020 was $1,510,000, and cash dividends declared and paid during 2020 totaled $82,000. In addition, an error was discovered: land costing $87,000 (net of tax) was charged to maintenance and repairs expense in 2019. Determine the ending retained earnings balance for the year ended December 31, 2020.
Answer:
$2,192,000
Explanation:
Adjusted January 1, 2020 retained earning = January 1, 2020 retained earning + Error (Land cost) = $677,000 + $87,000 = $764,000
Retained earning for 2020 = Net income during 2020 - Dividends declared and paid during 2020 = $1,510,000 - $82,000 = $1,428,000
December 31, 2020 retained earnings = Adjusted January 1, 2020 retained earning + Retained earning for 2020 = $764,000 + $1,428,000 = $2,192,000.
Therefore, the ending retained earnings balance for the year ended December 31, 2020 is $2,192,000.
C. Urgent care admission, deductible is met Urgent care visit at Top Notch Urgent Care (out-of-network) Urgent care visit DOS: 07/04/2018 Allowable Charges = $230.00 Diagnosis: J02.0, Streptococcal pharyngitis Procedure: 99203, Level 3 clinic visit Procedure: 87880, Infectious agent antigen detection by immunoassay with direct optical observation; Streptococcus, group A Cost-sharing amount is _________
Answer:
$80.50
Explanation:
Calculation of Cost-sharing amount :
Using this formula
Allowed charges *out-of-network coinsurance percent
Where:
Allowed charges =$230.00
Out-of-network coinsurance percent =35%
Hence,
$230.00 * .35
= $80.50
Therefore the Cost-sharing amount will be $80.50
Apr. 20 Purchased $35,500 of merchandise on credit from Locust, terms n/30. May 19 Replaced the April 20 account payable to Locust with a 90-day, 8%, $35,000 note payable along with paying $500 in cash. July 8 Borrowed $63,000 cash from NBR Bank by signing a 120-day, 10%, $63,000 note payable. __?__ Paid the amount due on the note to Locust at the maturity date. __?__ Paid the amount due on the note to NBR Bank at the maturity date. Nov. 28 Borrowed $21,000 cash from Fargo Bank by signing a 60-day, 7%, $21,000 note payable. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Answer:
April 20
Dr Inventory 35,500
Cr Account payable 35,500
May 19
Dr account payable 35,500
Cr cash 500
Cr note payable 35,000
Juy 8
Dr Cash 63,000
Cr Note payable 63,000
Aug 17
Dr Note payable 35,000
Dr Interest expense 700
Cr Cash 35,700
Nov 5
Dr Note payable 63,000
Dr Interest expense 1,575
Cr Cash 64,575
Nov 28
Dr Cash 21,000
Cr Note payable 21,000
Dec 31
Dr Interest expense 135
Cr Interest payable 135
Jan 27
Dr Note payable 21,000
Dr Interest payable 135
Dr Interest payable 110
Cr Cash 21,245
Explanation:
Adjusting entry for accrued interest on the note to Fargo Bank.
April 20
Dr Inventory 35,500
Cr Account payable 35,500
May 19
Dr account payable 35,500
Cr cash 500
Cr note payable 35,000
Juy 8
Dr Cash 63,000
Cr Note payable 63,000
Aug 17
Dr Note payable 35,000
Dr Interest expense 700
(35,000×8%×90/360)
Cr Cash 35,700
Nov 5
Dr Note payable 63,000
Dr Interest expense 1,575
(63,000×10%×90/360)
Cr Cash 64,575
Nov 28
Dr Cash 21,000
Cr Note payable 21,000
Dec 31
Dr Interest expense 135
( 21,000×7%×33/360)
Cr Interest payable 135
Jan 27
Dr Note payable 21,000
Dr Interest payable 135
Dr Interest payable 110
(21,000×7×27/360)
Cr Cash 21,245
McCoy’s Fish House purchases a tract of land and an existing building for $820,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $1,200. The company also pays $10,400 in property taxes, which includes $7,200 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $3,200 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $41,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $5,600 and pays an additional $11,300 to level the land.
Required:Determine the amount McCoy’s Fish House should record as the cost of the land. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
$875,100
Explanation:
The values given in the question are as follows
Purchase price of land= $820,000
Title insurance= $1,200
Property taxes= $10,400
Amont of tax due for the current fiscal year= $3,200
Back taxes= $7,200
Cost of removing the building= $41,000
Salvaged materials= $5,600
Amount used to level the land= $11,300
The cost of land for McCoy's fish house can be calculated as follows
Total cost of land= Puchase price of land+Title insurance+Back property taxes+Cost of removing the building+Level the land-Salvage materials
$820,000+$1,200+$7,200+$41,000+$11,300-$5,600
= $875,100
Hence the total amount McCoy fish house should record as the cost of land is $875,100
Karim Corp. requires a minimum $8,000 cash balance. Loans taken to meet this requirement cost 1% interest per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,400, and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) follow. July August September Cash receipts$20,000 $26,000 $40,000 Cash payments 28,000 30,000 22,000
Answer:
a. Ending Cash balances:
July = $8,000
August = $8,000
September = $14,207
b. Ending Loan balances:
July = $7,600
August = $11,676
September = $0
Explanation:
Find attached the excel file for the full cash budget for July, August and September.
Each of the following are classified as a noncash investing or financing activity except:
a. retirement of debt by issuing stock
b. reissuing treasury stock
c. purchase of long-term assets by issuing bonds
d. purchase of noncash assets by issuing equity
Answer: b. reissuing treasury stock
Explanation:
Investing Activities in the Cashflow Statement refer to transactions that have to do with the buying and selling of Capital Goods such as Fixed Assets. It also refers to investments in other company bonds and stock.
Financing has to do with how the firm finances it's operations. These include long term debt and stock related transactions.
When these transactions are non-cash, it means quite rightly that no cash was exchanged and instead something else for exchanged instead of cash. For example, A non-cash Investing and Financing activity would be the purchase of long-term assets by issuing bonds.
In this question, option B being the reissuance of Treasury Stock is not a non-cash transaction. Treasury Stock is the company's own stock that it required from the market. By reissuing it, they will be doing so with cash involved. That is, people will buy the reissued shares and pay cash for them thus making it a Cash Financing Activity.
Two athletes of equal ability are competing for a prize of $10,000. Each is deciding whether to take a dangerous performance-enhancing drug. If one athlete takes the drug and the other does not, the one who takes the drug wins the prize. If neither take the drug they tie and split the prize.Both athletes know that the drug imposes a health risk of X dollars, meaning there are future health costs.Draw the 2 x 2 payoff matrix describing the decisions the athletes face.For what X (cost of health risks) is taking the drug the Nash Equilibrium? Explain in writing.Does making the drug safer thus lowering the costs of the risks (X) make the athletes better or worse off? Explain your answer in writing.
Answer:
The best option is when both athletes decide not to take drugs and each earns $5,000.
Explanation:
In a Nash equilibrium scenario:
Athlete 1's decision
take drug do not take drug
Athlete 2's $5000 - x/ $0 /
decision $5,000 - x $10,000 - x
take drug
do not $10,000 - x/ $5,000 /
take drug $0 $5,000
The best possible situation occurs when both athletes decide not to take the drugs. In this situation both athletes win $5,000. If both athletes decide to take the drug and charge the price, they will both earn $5,000 - X.
The Nash equilibrium should show the situation where both players win the most regarding the other player's strategy.
Preparing a classified balance sheet for a merchandiser LO P4 Adams Co. reports the following balance sheet accounts as of December 31. Salaries payable Buildings Prepaid rent Merchandise inventory Accounts payable Prepaid insurance Accounts receivable Common stock $ 6,400 Retained earnings 61,400 Notes payable (due in 9 years) 7,400 Office supplies 14,800 Land 14,000 Accumulated depreciation-Building 3,800 Mortgages payable (due in 5 years) 8,000 Cash 14,000 $ 54,000 38,000 2,800 30,000 5,800 20,000 24,000 Required: Prepare a classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.
Answer:
Assets
Current Assets
Cash $24,000
Accounts Receivable $8,000
Merchandise inventory $14,800
Office Supplies $2,800
Prepaid Rent $7,400
Prepaid Insurance $3,800
Total Current Assets: $60,800
Property, Plant and Equipment
Buildings $61,400
Land $30,000
Accumulated Depreciation (5,800)
Total PP&E: $85,600
Total Assets: $146,400
Liabilities
Current Liabilities
Salaries Payable $6,400
Accounts payable $14,000
Total Current Liabilities: $20,400
Long-Term Liabilities
Notes Payable (due in 9 years) $38,000
Mortgages Payable $20,000
Total Long-Term Liabilities: $58,000
Total Liabilities: $78,400
Stockholders' Equity
Common Stock $14,000
Retained Earnings $54,000
Total Stockholders' Equity: $68,000
Total Liabilities + Stockholders' Equity: $146,400
Adjusting factory overhead LO P4
The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.
April 30 May 31
Inventories
Raw materials $ 43,000 $ 52,000
Work in process 10,200 21,300
Finished goods 63,000 35,600
Activities and information for May
Raw materials purchases (paid with cash) 210,000
Factory payroll (paid with cash) 345,000
Factory overhead Indirect materials 15,000
Indirect labor 80,000
Other overhead costs 120,000
Sales (received in cash) 1,400,000
Predetermined overhead rate based on direct labor cost 70 %
Determine whether there is over or underapplied overhead.Factory OverheadUnderapplied overhead
Answer:
26,500 Under applied
Explanation:
Lock-Tite Company
Actual Factory Overhead 215,000
Factory overhead Indirect materials 15,000
Indirect labor 80,000
Other overhead costs 120,000
Direct Labor = 345,000
Predetermined Overhead = 70% of $ 345,000= $ 241,500
Actual Overhead = $ 215,000
Difference = Predetermined Overhead - Actual Overhead
= 241,500- $ 215,000= 26,500 Under applied
We find the difference between actual overhead and applied overhead to find the underapplied ( overapplied overhead. If the actual overhead is less than applied overhead it is underapplied. But if the actual overhead is greater than applied overhead it is over applied.
Raw materials Opening $ 43,000
Add Materials Purchases 195000 ( 210,000 - 15000)
Less Raw materials Closing $ 52,000
Direct Materials Used 186,000
Direct Labor 345,000
FOH 215,000
Total Manufacturing Costs 746,000
Add Work in process Opening 10,200
Less Work in process Closing 21,300
Add Finished goods Opening 63,000
Less Finished goods Closing 35,600
Cost Of Goods Sold 762,300
On October 10, the stockholders’ equity of Sherman Systems appears as follows.
Common stock–$10 par value, 90,000 shares authorized, issued, and outstanding $ 900,000
Paid-in capital in excess of par value, common stock 306,000
Retained earnings 1,008,000
Total stockholders’ equity $ 2,214,000
1.
Prepare journal entries to record the following transactions for Sherman Systems.
a.
Purchased 6,800 shares of its own common stock at $43 per share on October 11.
b. Sold 1,450 treasury shares on November 1 for $49 cash per share.
c. Sold all remaining treasury shares on November 25 for $38 cash per share.
1.Record the purchase of 6,800 shares of its own common stock for $43 cash per share.
2.Record the reissue of 1,450 shares of the treasury stock for $49 cash per share.
3.Record the reissue of the remaining shares of the treasury stock for $38 cash per share.
2.
Prepare the revised equity section of its balance sheet after the October 11 treasury stock purchase.
Answer:
Sherman Systems
1. Journal Entries
Debit Credit
a) October 11:
Treasury Stock $68,000
Additional Paid-in Capital $224,400
Cash $292,400
To record purchase of 6,800 shares at $43 per share.
b) November 1:
Cash $71,050
Treasury Stock $14,500
Additional Paid-in Capital $56,550
To record sale of 1,450 treasury shares at $49 per share.
c) November 25:
Cash $203,300
Treasury Stock $53,500
Additional Paid-in Capital $149,800
To record sale of 5,350 treasury shares at $38 per share.
2. Revised Equity Section of Sherman Systems' Balance Sheet as at October 11:
Common stock at“$10 par value,
90,000 shares authorized, issued, and outstanding $ 900,000
Paid-in capital in excess of par value, common stock 81,600
Treasury Stock (68,000)
Retained earnings 1,008,000
Total stockholders' equity $1,921,600
Explanation:
1. Additional Paid-in Capital:
Balance on October 10 $306,000
Treasury Stock ($224,400)
Balance on October 11 $81,600
2. Treasury Stock is a contra account to Common Stock. It represents the purchase of its own shares by a company. There are two methods for accounting for treasury stock. One is the par value method, where the adjustments for above or below par value are made in the Additional Paid-in Capital account. The other method is the costing method, where the adjustments for above or below par value are made in the Treasury stock.
3. The equity section prepared above is limited to the October 11 transaction. The transactions occurring on November 1 and 25 were not required by the question.
4. The remaining shares of the treasury stock reissued on November 25 is equal to 6,800 - 1,450 = 5,350 shares.
You started a venture 2 years ago with $400,000 dollars and own 60% of the 500,000 shares issued. What is the pre and post money valuations under each deal offered: • Alpha Ventures offers $200,000 for 20% of the firm • Beta Ventures offers $400,000 for 600,000 new shares • Kappa Ventures offers $200,000 for 100,000 existing shares
Answer:
Alpha Venture :Post money $1,000,000
Alpha Venture :Post money $800,000
Beta Ventures Post money $400,000
Beta Venture Pre-money $800,000
Kappa Ventures Post money $200,000
Kappa Ventures Pre money $400,000
Explanation:
Calculation for Alpha Ventures Post money:
$200,000/20%=$ 1,000,000
Alpha Ventures Pre-money will be :
$1,000 000- $200,000
= $800,000
Calculation for Beta Ventures Post money
= $400,000
Beta Ventures Pre-money will be:
=$ 400,000+$400,000
=$800,000
Calculation of Kappa Ventures Post money:
= $200,000
Kappa venture Pre-money will be:
= $200,000+$200$000
= $400,000
The pre and post-money valuations under the three deal offerings are as follows:
Deals Investment Pre-money Post-money
Amount Valuation Valuation
Alpha Ventures $200,000 $800,000 $1,000,000 ($200,000/20%)
Beta Ventures $400,000 $552,381 $952,381 ($400,000/42%)
Kappa Ventures $200,000 $1,466,667 $1,666,667 ($200,000/12%)
Data and Calculations:
Dollars Number Percentage
of Shares Holding
Capital investment = $400,000 500,000 60%
Total capital $666,667 833,333 100%
Beta Ventures:
Total new shares = 1,433,333 (833,333 + 600,000)
Percentage holding = 42% (600,000/1,433,333 x 100)
Kappa Ventures:
Percentage holding = 12% (100,000/833,333 x 100)
Learn more: https://brainly.com/question/25521166
Magic City Enterprises manufactures a beautiful bookcase. Listed below are a number of costs incurred. Identify each cost as either fixed or variable; product or period. If the cost is a product cost, then state whether it would be considered a direct or indirect cost.
1. Factory Rent
2. Advertising
3. Packing Supplies for Shipping
4. Factory Security Guard
5. Wages of Employees Who Sand the wood
6. Administrative Assistant in Corporate office
7. Paper Towels in the Men's Room in the Factory
8. Executive Jet
9. Lumber
10. Depreciation on Factory Tools (Straight-Line)
Answer:
1. Factory Rent = Fixed , Product (Indirect Cost)
2. Advertising = Fixed , Period
3. Packing Supplies for Shipping = Variable, Period
4. Factory Security Guard = Fixed, Product (Indirect Cost)
5. Wages of Employees Who Sand the wood = Variable, Product (Direct Cost)
6. Administrative Assistant in Corporate office = Fixed , Period
7. Paper Towels in the Men's Room in the Factory = Fixed , Product (Indirect Cost)
8. Executive Jet = Fixed, Period
9. Lumber = Variable, Product (Direct Cost)
10. Depreciation on Factory Tools (Straight-Line) = Fixed, Product (Indirect Cost)
Explanation:
Product versus Period Cost.
A product cost is attached to the cost object and is included in the valuation of the cost object.All manufacturing costs are product costs.
Period costs are not attached to the products. Non-manufacturing costs are Period costs.
Fixed versus Variable.
Behavior of costs in relationship with Activity will tell us whether a cost is a Fixed cost or Variable Cost.
Fixed Costs remain the same for any level of activity, whilst variable costs vary in direct proportion to with the level of activity.
Direct versus Indirect.
By observation of the cost object, we are able to identify is a cost is a direct cost or indirect cost.
Direct costs can be easily traced on the cost object. Indirect costs are difficult to trace on the cost object.
Ben and Carla Covington plan to buy a condominium. They will obtain a $221,000, 30-year mortgage at 5.0 percent. Their annual property taxes are expected to be $1,850. Property insurance is $490 a year, and the condo association fee is $225 a month. Based on these items, determine the total monthly housing payment for the Covingtons. Use Exhibit 7-7. (Round your intermediate calculations and final answer to 2 decimal places.)
Answer:
$1,551
Explanation:
Ben and Carla Covington
(Monthly)
Mortgage payment $1,105
(5% ×221)
Property taxes $155
( $1,850/12)
Property insurance 41
($490/12 )
Association fee $250
Covingtons total monthly housing payment $1,551
Tandy Company was issued a charter by the state of Indiana on January 15 of this year. The charter authorized the following: Common stock, $5 par value, 116,000 shares authorized Preferred stock, 15 percent, par value $15 per share, 5,200 shares authorized During the year, the following transactions took place in the order presented: Sold and issued 20,600 shares of common stock at $30 cash per share. Sold and issued 2,000 shares of preferred stock at $34 cash per share. At the end of the year, the accounts showed net income of $41,200. No dividends were declared.
Required: 1. Prepare the stockholders' equity section of the balance sheet at the end of the year.
Answer:
Equity section of the balance sheet at the end of the year
Authorized Share Capital
116,000 Common stock, $5 par value. 580,000
5,200 Preferred stock, 15 percent, par value $15 per share, 78,000
658,000
Issued Share Capital
Common stock
20,600 Common stock, $5 par value 103,000
Share Premium (20,600×$25) 515,000
Total 618,000
Preferred stock
2,000 Preferred stock, 15 percent, par value $15 per share 30,000
Share Premium (2,000×$19) 38,000
Total 68,000
Retained Earnings
Profit for the year 41,200
Total Equity 727,200
Explanation:
Price issued above the par value of a share is called share premium and is included in equity for each class of stock.
Profit for the year is also included in Equity as Part of the Retained Earnings.
A mortgage note payable with a fixed interest rate requires the borrower to make installment payments over the term of the loan. Each installment payment includes interest on the unpaid balance of the loan and a payment on the principal. With each installment payment, indicate the effect on the portion allocated to interest expense and the portion allocated to principal.
Portion Allocated to Interest Expense Portion Allocated to Payment of Principal
a. Decreases, Increases
b. Increases, Increases
c. Increases, Decreases
d. Decreases, Decreases
Answer: a. Decreases, Increases
Explanation:
With each installment paid, the interest expense goes down while the principal repayment goes up. This is because the amount of Principal reduces with every payment therefore the interest is charged on a lesser figure.
For example, assume $10,000 is to be paid per month on $100,000 mortgage with a 10% rate.
The first time the 10% is charged on $100,000 it will give $10,000 and since the payment is $10,000, all of it will be considered interest.
The second time the 10% is charged it will be charged on $90,000 (100,000 - first payment of $10,000) instead which will.mean interest payment is now only $9,000 (10% of $90,000). The difference of $1,000 ($10,000 payable every month and interest of $9,000) will be Principal repayment.
The third time around then, the amount left is $80,000. Interest payment will be $8,000 and Principal repayment becomes $2,000.
And so on and so forth.
A drawback of short-term contracting as an alternative to making a component in-house is that:_______.
a. it is the most-integrated alternative to performing an activity so the principal company has no control over the agent.
b. the buying firm cannot demand lower prices due to the lack of a competitive bidding process.
c. it fails to allow a long planning period that individual market transactions provide.
d. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality.
Answer:
D. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality.
Explanation:
A drawback of short-term contracting as an alternative to making a component in-house is that the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality.