Answer:
Seth's total profits is $1,535.359
Explanation:
According to the given data we have the following:
MC = 0 and we will ignore fixed costs
Therefore TC = 0
Demand function in Santa barbara is
p = 74 - q
MR = 74 - 2q
Since Seth sets different uniform prices in two markets to maximizes his profit therefore ,
MR = MC
74 - 2q = 0
2q = 74
q=37
p = 74 - 37 = 37
Profit = pq - TC
= 37*37 - 0
= $1,369
Inverse demand finction Goleta is
p = 39 - 4q
MR = 39 - 8q
MR = MC
39 - 8q = 0
8q = 39
q = 4.875
p = 39 - 4.875 = 34.125
Profit = pq - TC
= 34.125*4.875 - 0
= $166.359
Therefore, Seth's total profits = $1,369 + $166.359
Seth's total profits= $1,535.359
Seth's total profits is $1,535.359
The proposals submitted to the customer should:
A. be set aside and have the team request a best and final offer from every bidder to get a lower price and choose the one with the new lowest price.
B. be examined for free advice on how to solve the problem then assign an internal project team to what was the best solution.
C. be reviewed by one person without any predefined criteria for evaluation.
D. be reviewed by a team and evaluated on predefined evaluation criteria.
Answer:
The proposals submitted to the customer should:
D. be reviewed by a team and evaluated on predefined evaluation criteria.
Explanation:
In business, a proposal is a business application from one entity to another, soliciting for a contract based on an understanding of the customer's problems and requirements.
There many sections, including objectives, recommended solution, estimated project schedule, company's background information, fee summary, and other important terms and conditions.
Given the above sections, it becomes necessary for a team to evaluate proposals before they are submitted to customers. Teamwork will help modifications to be made based on each customers requirements.
A company often uses proposals for different purpose. The proposals submitted to the customer should be set aside and have the team request a best and final offer from every bidder to get a lower price and choose the one with the new lowest price.
RFP is simply known as request for proposal. It is simply known as a type of document that contains a lists all of the requirements and needs of a specific project.It aid firms in their preparation for upcoming projects as it is a kind of a proposal used by potential contractors and agencies.
Conclusively an RFP for a potential customer should be well written, stated out and one should take great care that is carried out rightly.
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The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 2900 units, the actual direct labor cost was $81600 for 5100 direct labor hours worked, the total direct labor variance is
Answer:
$5400 Favorable
Explanation:
Standard 2 hour at $15 per hour
Standard hours 2 hour per unit * 2900 units = 5800 hours
Total Standard cost = 5800 hours * $15 per hour = $87,000
Actual hours = 5100
Actual cost = $81600 / 5100 hours = $16 per hour
Variance = Standard - Actual
Labor hour Variance Favorable = 700 hours (5800 hours - 5100 hours)
Total Labor variance = $5400 ($87,000 - $81,600)
On October 1, 20Y6, Jay Crowley established Affordable Realty, which completed the following transactions during the month: Oct. 1 Jay Crowley transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $40,000. 2 Paid rent on office and equipment for the month, $4,800. 3 Purchased supplies on account, $2,150. 4 Paid creditor on account, $1,100. 5 Earned sales commissions, receiving cash, $18,750. 6 Paid automobile expenses (including rental charge) for month, $1,580, and miscellaneous expenses, $800. 7 Paid office salaries, $3,500. 8 Determined that the cost of supplies used was $1,300. 9 Paid dividends, $1,500. 1. Journalize entries for transactions Oct. 1 through 9. Refer to the Chart of Accounts for exact wording of account titles. 2. Post the journal entries to the T accounts, selecting the appropriate date to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete. Accounts containing only a single entry do not need a balance. 3. Prepare an unadjusted trial balance as of October 31, 20Y6. 4. Determine the following: a. Amount of total revenue recorded in the ledger. b. Amount of total expenses recorded in the ledger. c. Amount of net income for October. 5. Determine the increase or decrease in retained earnings for October.
Answer and Explanation:
1. According to the scenario, the journal entries are shown below:
Journal Entry
October 1 Cash A/c Dr. $40,000
To Common stock A/c $40,000
(Being the exchange for the common stock is recorded)
October 2 Rent expenses A/c Dr. $4,800
To Cash A/c $4,800
(Being the paid rent on office and equipment is recorded)
October 3 Supplies A/c Dr. $2,150
To Accounts payable A/c $2,150
(Being the purchase of supplies is recorded)
October 4 Accounts payable A/c Dr. $1,100
To Cash A/c $1,100
(Being the cash paid is recorded)
October 5 Cash A/c Dr. $18,750
To Sales commission A/c $18,750
(Being the earned sales commission is recorded)
October 6 Automobile expense A/c Dr. $1,580
Miscellaneous expense A/c Dr. $800
To Cash A/c $2,380
(Being the automobile and miscellaneous expenses paid is recorded)
October 7 Office salaries expense A/c Dr. $3,500
To Cash A/c $3,500
(Being the office salaries paid is recorded)
October 8 Supplies expense A/c Dr. $1,300
To Supplies A/c $1,300
(Being the cost of supplies is recorded)
October 9 Dividend A/c Dr. $1,500
To Cash A/c $1,500
(Being the dividend paid is recorded)
2. Now the posting of various accounts are as follows
T Accounts
Cash A/c
Particular Amount ($) Particular Amount ($)
Common stock 40,000 Rent expenses 4,800
Sales commission 18,750 Account payable 1,100
Automobile expense 1,580
Miscellaneous expense 800
Office salaries expense 3,500
Dividend expense 1,500
Supplies Account
Particular Amount ($) Particular Amount ($)
Accounts payable 2,150 Supplies expenses 1,300
Accounts Payable
Particular Amount ($) Particular Amount ($)
Cash 1,100 Supplies 2,150
Common Stock
Particular Amount ($) Particular Amount ($)
Cash 40,000
Dividends
Particular Amount ($) Particular Amount ($)
Cash 1,500
Sales Commission
Particular Amount ($) Particular Amount ($)
Cash 18,750
Rent expense
Particular Amount ($) Particular Amount ($)
Cash 4,800
Office Salaries expense
Particular Amount ($) Particular Amount ($)
Cash 3,500
Supplies Expenses
Particular Amount ($) Particular Amount ($)
Supplies 1,300
Automobile Expense
Particular Amount ($) Particular Amount ($)
Cash 1,580
Miscellaneous expense
Particular Amount ($) Particular Amount ($)
Cash 800
3. Now unadjusted trail balance is presented below:
Unadjusted Trial Balance
Particular Debit Amount ($) Particular Credit Amount ($)
Cash 45,470 Accounts payable 1,050
Supplies 850 Common stock 40,000
Dividends 1,500 Sales Commission 18,750
Rent expense 4,800
Office salaries expense 3,500
Automobile expense 1,580
Supplies expense 1,300
Miscellaneous expense 800
Total 59,800 Total 59,800
4
a).Amount of total revenue recorded in the ledger
Sales commissions = $18,750
b). Amount of total expenses recorded in the ledger
Particular Amount ($)
Rent expense 4,800
Office salaries expense 3,500
Automobile expense 1,580
Supplies expense 1,300
Miscellaneous expense 800
Amount of total expenses
recorded in the ledger 11,980
c).Amount of Net income for October is
= Total Revenue - Total Expenses
= $18,750 - $11,980
= $6,770
d) Increase or decrease in retained earnings for October is
= Net Income - Dividends
= $6,770 - $1,500
= $5,270
All assets, expenses and dividend contains normal debit balance while the liabilities, revenues, and the stockholder equity contains normal credit balance
Which of the following clauses states that full payment of damages to structures under the homeowners policy will be made only if the insurance equals 80 or more percent of the replacement cost of the structure and is carried on the property at the time of the loss?
a. Coinsurance clause.
b. Inflation rider clause.
c. Reinsurance clause.
d. Replacement clause
Answer: coinsurance clause
Explanation:
A coinsurance clause is a provision in the home insurance policy which requires the individual to carry coverage that is worth a certain percentage of the home's value. The failure to meet requirement will reduces the compensation after a loss.
Under the coinsurance clause, the insurance company will reimburses the value of damages to an insured asset for at least 80% of the replacement value of the asset. The reinsurance clause allows an insurer to take the reinsurance based on the original insurance.
Your coin collection contains 95 1952 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2060, assuming they appreciate at an annual rate of 4.9 percent
Answer:
FV= $16,652.38
Explanation:
Giving the following information:
Your coin collection contains 95 1952 silver dollars.
Number of years= 2060 - 1952= 108
They appreciate at an annual rate of 4.9 percent.
To calculate the future value of the coins, we need to use the following formula:
FV= PV*(1+i)^n
FV= 95*(1.049^108)
FV= $16,652.38
You borrowed $30,000 to finance the education expenses for your senior year of college at the beginning of your senior year. The loan will be paid off over five years and the first installment will be due a year later. The loan carriers an interest rate of 7% per year and is to be repaid in equal annual installments over the next five years. Suppose you want to negotiate with the bank to defer the first loan installment until the end of year 2. (But you still desire to make five equal installments at 7% interest.) If the bank wishes to earn the same profit, what should be the new annual installment
Answer:
$7,828.869
Explanation:
For computing new annual installment first we have to determine the equivalent worth of borrowed amount i.e $30,000 which is shown below:
= Borrowed amount × (1 + interest rate)
= $30,000 × (1 + 0.07)
= $30,000 × 1.07
= $32,100
Now the new annual installment is
= Equivalent worth of borrowed amount × (A/P,7%,5%)
= $32,100 × 0.24389
= $7,828.869
Refer to the A/P table for determining the factor
Oriole, Inc., has four-year bonds outstanding that pay a coupon rate of 6.20 percent and make coupon payments semiannually. If these bonds are currently selling at $920.89. What is the yield to maturity that an investor can expect to earn on these bonds
Answer:
8.58%
Explanation:
For computing the yield to maturity we need to apply the RATE formula i.e to be shown in the attachment below:
Provided that,
Present value = $920.89
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 6.20% ÷ 2 = $31
NPER = 4 years × 2 = 8 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the formula
The yield to maturity is
= 4.29% × 2
= 8.58%
Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows:
Activity Activity Rate
Fabrication $31 per machine hour
Assembly $17 per direct labor hour
Setup $58 per setup
Inspecting $26 per inspection
Production scheduling $18 per production order
Purchasing $15 per purchase order
The activity-base usage quantities and units produced for each product were as follows:
Activity Base Elliptical Machines Treadmill
Machine hours 1,956 1,154
Direct labor hours 394 154
Setups 44 14
Inspections 700 420
Production orders 69 14
Purchase orders 195 119
Units produced 300 201
Required:
Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for each product. Complete the Activity Tables for elliptical machines and treadmills. If required, round per-unit answers to the nearest cent.
Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for elliptical machines product. Complete the Activity Table for elliptical machines. If required, round per-unit answers to the nearest cent.
Elliptical Machines
Activity Activity-
Base Activity Activity
Usage X Rate = Cost
Fabrication
Assembly
Setup
Inspecting
Production scheduling
Purchasing
Total activity cost
÷ Number of units ÷
Activity cost per unit
Use the activity rate and usage information to calculate the total activity cost and activity cost per unit for treadmill product. Complete the Activity Table for treadmills. If required, round per-unit answers to the nearest cent.
Treadmills
Activity Activity-
Base Activity Activity
Usage X Rate = Cost
Fabrication
Assembly
Setup
Inspecting
Production scheduling
Purchasing
Total activity cost
÷ Number of units ÷
Activity cost per unit
Answer: Please see below for answers
Explanation: step by step explanation
For Elliptical Machines
Acitvity Activity usage Activity Rate Activity cost(Activty
usagexActivity Rate)
Fabrication 1,956 $31 $60,636
Assembly 394 $17 $6,698
SET up 44 $58 $2552
inspections 700 $ 26 $18,200
production scheduling 69 $18 $1242
purchasing 195 $15 $2925
Total Activity cost $92,253
For Treadmills
Acitvity Activity usage Activity Rate Activity cost(Activity
usage x Activity Rate)
Fabrication 1154 $31 35,774
Assembly 154 $17 2618
SET up 14 $58 $812
inspections 420 $26 $10,920
production schedulimng 14 $18 $252
purchasing 119 $15 $1785
Total Activity cost $52,161
Elliptical Machines Treadmill
Total Activity cost $92,253 $52,161
Units produced 300 201
Activity cost per unit $307.51 $259.507
≈$307.5 ≈$259.5
Colah Company purchased $2,400,000 of Jackson, Inc., 6% bonds at their face amount on July 1, 2021, with interest paid semi-annually. The bonds mature in 20 years but Colah planned to keep them for less than 3 years, and classified them as available for sale investments. When the bonds were acquired Colah decided to elect the fair value option for accounting for its investment. At December 31, 2021, the Jackson bonds had a fair value of $2,740,000. Colah sold the Jackson bonds on July 1, 2022 for $2,160,000.
The purchase of the Jackson bonds on July 1.
Interest revenue for the last half of 2021.
Any year-end 2021 adjusting entries.
Interest revenue for the first half of 2022.
Any entry or entries necessary upon sale of the Jackson bonds on July 1, 2022.
Required:
1. Prepare Colah’s journal entries for above transactions.
2. Complete the following table to show the effect of the Jackson bonds on Colah’s net income, other comprehensive income, and comprehensive income for 2021, 2022, and cumulatively over 2021 and 2022.
Answer:
Dr bonds investment $2,400,000
Cr cash $2,400,000
Dr cash $ 72,000.00
Cr interest revenue $72,000.00
Dr fair value adjustment $ 340,000.00
Cr unrealized gains $340,000.00
2022:
Dr cash $ 72,000.00
Cr interest revenue $72,000.00
Dr realized loss($2,160,000-$2,400,000) $240,000
Cr fair value adjustment $240,000
sale of bonds:
Dr cash $2,160,000
Dr realized loss $240,000
Cr bonds investment $2,400,000
Explanation:
Upon purchase of investment,the bond investments is debited with $2.4 million and cash credited with same amount
Interest revenue for last half year=$2,400,000*6%*6/12=$72,000.00
unrealized gains=$2,740,000-$2,400,000=$340,000.00
Interest for first half of 20222=$2,400,000*6%*6/12=$72,000.00
Frogue Corporation uses a standard cost system. The following information was provided for the period that just ended:
Actual price per kilogram $2.50
Actual kilograms of material used 31,000
Actual hourly labor rate $18.10
Actual hours of production 4,900 labor hours
Standard price per kilogram $2.80
Standard kilograms per completed unit 6 kilograms
Standard hourly labor rate $18.00
Standard time per completed unit 1 hour
Actual total factory overhead $34,900
Actual fixed factory overhead $18,000
Standard fixed factory overhead rate $1.20 per labor hour
Standard variable factory overhead rate $3.80 per labor hour
Maximum plant capacity 15,000 hours
Units completed during the period 5,000
The direct materials cost variance is:_________.
Answer:
Materials Cost Variance = 6500 favorable
Explanation:
Frogue Corporation
AP= Actual price per kilogram $2.50
AQ= Actual kilograms of material used 31,000
SP = Standard price per kilogram $2.80
SQ= Standard kilograms per completed unit 6 kilograms = 5000 units *6 kg= 30,000 kg
Material Price Variance =( AP -SP)(AQ)=
= ( $2.50- $2.80)31,000 = 9300 Favorable
It is favorable because the standard price is higher than the actual price.
Material Quantity Variance =( AQ -SQ)(AP)= (31000- 30,000) 2.8
= 1000*2.8= 2800 unfavorable
It is unfavorable because the standard quantity is lower than the actual quantity.
Materials Cost Variance =Material Price Variance+Material Quantity Variance
=9300 Favorable+2800 unfavorable=
Materials Cost Variance = 6500 favorable
When favorable and unfavorable are added the unfavorable is with negative sign so they are subtracted.
Electro Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending finished goods inventory for the first quarter will be 86,000 units. The following unit sales of the transmissions are expected during the rest of the year: second quarter, 430,000 units; third quarter, 455,000 units; and fourth quarter, 247,500 units. Company policy calls for the ending finished goods inventory of a quarter to equal 20% of the next quarter's budgeted sales. Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture.
Answer:
Production Budget
Quarter 2= 435,000 units
Quarter 3= 413,500 units
Explanation:
The production budgeted for a particular period is the expected units to be produced after adjusting the sales budget figures for opening and closing inventories.
Production budget = Sales volume + closing inventory - opening inventory
Quarter 2
Closing inventory in second quarter =20%× Quarter 3 sales= 20%×455,000
Opening inventory in Quarter 2 = Closing inventory quarter 1= 20% × quarter 2= 20%× 430,000
Production budget in Quarter 2 = 430,000 + (20%×455,000) - (20%× 430,000)=435000
Quarter 3
Closing inventory in third quarter =20%× Quarter 4 sales= 20%× 247,500
Opening inventory in Quarter 3 = Closing inventory quarter 2= 20%×455,000
Production budget in Quarter 3 = 455,000 + (20%× 247,500) +(20%×455,000)= 413500
Production Budget
Quarter 2= 435,000
Quarter 3= 413,500
Norton Manufacturing expects to produce 2,900 units in January and 3,600 units in February. Norton budgets $20 per unit for direct materials. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the raw materials inventory account (all direct materials) on January 1 is $38,650. Norton desires the ending balance in raw materials inventory to be 10% of the next month's direct materials needed for production. Desired ending balance for February is $51,100. What is the cost of budgeted purchases of direct materials needed for January
Answer:
Purchases= $26,550
Explanation:
Giving the following information:
Production:
January= 2,900 units
February= 3,600 units
Norton budgets $20 per unit for direct materials.
Beginning inventory raw materials= $38,650.
Desired ending inventory direct materials= 10% of the next month's direct materials needed for production.
To calculate the purchases of direct material, we need to use the following formula:
Purchases= production + desired ending inventory - beginning inventory
Purchases= 2,900*20 + (3,600*0.1)*20 - 38,650
Purchases= $26,550
Kenner Company is considering two projects.
Project A Project B
Initial investment $85,000 $24,000
Annual Cash Flows $20,676 $6,011
Life of the Project 6 years 5 years
Depreciation per year $14,167 $4,800
Present value of an Annuity of $1 in Arrears
Periods 8% 10% 12 % 14 %
1 0.926 0.909 0.893 0.877
2 1.783 1.736 1.690 1.647
3 2.577 .487 2.402 .322
4 3.312 3.170 3.037 .914
5 3.993 3.791 3.605 14.433
6 4.623 14.355 4.111 3.889
7 5.206 14.868 4.564 14.288
8 5.747 5.335 4.968 4.639
9 6.247 5.759 5.328 4.946
10 6.710 6.145 5.650 5.216
Required:
a. Which of the two projects, A or B, is better in terms of internal rate of return?
Answer:
Project A is better
Explanation:
The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
IRR can be calculated using a financial calculator
For project A ,
Cash flow in year 0 = $-85,000
Cash flow each year from year 1 to 6 = $20,676
IRR = 12%
For project B ,
Cash flow in year 0 = $-24,000
Cash flow each year from year 1 to 5= $6,011
IRR = 8%
Because project A has the higher IRR, it is better than project B.
To find the IRR 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 IRR button and then press the compute button.
I hope my answer helps you
A firm's dividends have grown over the last several years. 3 years ago the firm paid a dividend of $1. Yesterday it paid a dividend of $7. What was the average annual growth rate of dividends for this firm? Round the answer to two decimal places in percentage form.
Answer:
The average annual growth rate of dividends for this firm is 90.05%
Explanation:
In order to calculate the average annual growth rate of dividends for this firm we would to have to use the following formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
7=1*(1+r/100)^3
(7/1)^(1/3)=(1+r/100)
(1+r/100)=1.9005
r=(1.9005-1)*100
=90.05%(Approx).
The average annual growth rate of dividends for this firm is 90.05%
The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts during the year-end closing process would be: a. Dec. 31Income Summary925 Fees Earned750 Rent Revenue175 b. Dec. 31Income Summary925 Revenues925 c. Dec. 31Fees Earned750 Rent Revenue175 Income Summary925 d. Dec. 31Revenues925 Income Summary925
Answer:
c. Dec. 31Fees Earned750 Rent Revenue175 Income Summary925
Explanation:
The journal entry to record the closing of Fees earned and rent revenue is given below:
On Dec 31
Fees earned $750
Rent revenue $175
To Income summary $925
(Being the revenues and fees earned is closed)
For recording this we debited the fees earned and rent revenue and credited the income summary so that the correct recording and posting could be done
Therefore the total amount of $925 is credited to income summary
At December 31, 2020, Sandra’s Boutique had 1850 gift certificates outstanding, which had been sold to customers during 2020 for $70 each. Sandra’s operates on a gross profit of 60% of its sales. What amount of revenue pertaining to the 1850 outstanding gift certificates should be deferred at December 31, 2020?
Answer: $129,500
Explanation:
According to the Accrual Basis in Accounting, revenue and expenses should only be recognised when goods have been delivered.
On the December 31, 2020 Sandra's Boutique had 1,850 gift certificates outstanding but these had been sold already to people during the year for $70.
This means that they have been paid for a service that they have not given (they provide the service when the GIFT certificate is renewed).
They cannot therefore recognize the revenue as Revenue yet and have to defer it.
The amount to be Deferred will therefore be,
= 1,850 * $70
= $129,500
1) Prepare an ending 2015 Income Statement and Balance Sheet from the following information: Sales $800,000; Cost of Goods Sold $300,000; Accounts Receivables $20,000; Bonds Outstanding $160,000; Accounts Payable $20,000; Advertising Expense $1,000; Administrative Expenses $35,000; Interest Expense $24,000; Depreciation Expense $40,000; Dividends Paid $137,000; Rent Expense $5,000; Accruals $20,000; Common Stock $100,000; Retained Earnings $245,000 (Beginning 0f 2015); Cash $20,000; Inventory $45,000; Net Fixed Assets $600,000 (Beginning of 2015). (Assume a 40% Tax Rate)
Answer:
Ending retained earning for 2015 = $345,000
Total Assets = $645,000
Shareholder's equity = $445,000
Total liabilities = $200,000
Explanation:
a. Income Statement for the year ended 2015
Details $
Sales 800,000
Cost of Goods Sold 300,000
Gross profit 500,000
Advertising Expense (1,000)
Administrative Expenses (35,000)
Depreciation Expense (40,000)
Rent Expense (5,000)
Operating income 419,000
Interest Expense (24,000)
Income before tax 395,000
Taxation (40% * $395,000) (158,000)
Net income 237,000
Dividend paid (137,000)
Retained earning for the year 100,000
Beginning retained earning 245,000
Ending retained earning 345,000
a. Balance sheet as at the year ended 2015
Details $ $
Assets:
Beginning Net Fixed Assets 600,000
Depreciation 40,000
Ending Net Fixed Assets 560,000
Current Assets:
Cash 20,000
Accounts Receivables 20,000
Inventory 45,000
Total Assets 645,000
Shareholder's Fund:
Common Stock 100,000
Ending retained earning 345,000
Shareholder's equity 445,000
Bonds Outstanding 160,000
Accounts Payable 20,000
Accruals 20,000
Total liabilities 200,000
Total equities and Liabilities 645,000
Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase
orders, sales invoices and suppliers’ invoices to prepare journal vouchers for general ledger entries.
Each day he posts the journal vouchers to the general ledger and the related subsidiary ledgers. At the
end of each month, he reconciles the subsidiary accounts to their control accounts in the general
ledger to ensure they balance.
Discuss the internal control weaknesses and risks associated with the above process
Answer:
Internal control weaknesses and risks associated are as follows:
No proper segregation of duties - the accounting clerk is the who prepares the journal voucher and records the transactions in the system. He is also the one who performs monthly reconciliation. With no proper segregation of duties, there is an increased risk of material misstatements due to error or fraud not being detected and corrected. Assets will also be susceptible to theft or misappropriation due to a lack of segregation of duties.
No review is being performed by the clerk before recording the transaction - before recording, the accounting clerk should have matched and reviewed the details per invoice to its supporting documents. With no proper review, there is increased risk that balances in the financial statements are not recorded at correct amounts e.g., liabilities recorded are not valid due to undelivered inventories, assets are overstated due to no actual goods received yet, etc. There's also a risk that transactions are not recorded at the correct accounting period since the clerk does not review the details in the source document.
No review is being performed on the work performed by the clerk - since no oversight or review is being performed, there is an increased risk that the clerk will record fictitious transactions e.g., fictitious sales, fictitious cash disbursement, etc that may result to material misstatements in the financial statements.
The following are the risks associated with the above process;
There is a lot of burden placed on one individual (Richard Palm).
There is no work distribution- Richard does the entire job from dealing with purchasing orders, sales invoices and suppliers' invoices.
The process is prone to fraud and errors as Richard has to manage too much work on his own. In the process of reconciling of the subsidiary accounts to the control accounts he may lose some of the data.
There is also data confidentiality risk- organizations' data should be handled with confidentiality and information should remain private.
Shen's Performance Pizza is a small restaurant in Philadelphia that sells gluten-free pizzas. Shen's very tiny kitchen has barely enough room for the three ovens in which his workers bake the pizzas. Shen signed a lease obligating him to pay the rent for the three ovens for the next year. Because of this, and because Shen's kitchen cannot fit more than three ovens, Shen cannot change the number of ovens he uses in his production of pizzas in the short run.
However, Shen's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Shen lets them know how many workers he needs for each day of the week. In the short run, these workers are_________ inputs, and the ovens are__________ inputs.
Answer:
Variable
Fixed
Explanation:
Varbaibe inputs are inputs that can be changed or varied with production. If production is rising, the demand for variable inputs would increase. Because Shen varies his workers, they are a variable input.
Fixed inputs are inputs that cannot be varied or changed in the short run.
I hope my answer helps you
Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year Net Income Net Cash Flow 1 $75,000 $285,000 2 100,000 290,000 3 109,000 190,000 4 36,000 125,000 $320,000 $890,000 The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Required: Determine the average rate of return on investment, including the effect of depreciation on the investment. Round your answer to one decimal place. %
Answer:
The average rate of return on investment is 19.8%
Explanation:
According to the given data we have the following:
Initial Investment = $810,000
Salvage Value = $0
Henc, Average Investment = (Initial Investment + Salvage Value) / 2
Average Investment = ($810,000 + $0) / 2
Average Investment = $405,000
Average Net Income = ($75,000 + $100,000 + $109,000 + $36,000) / 4
Average Net Income = $320,000 / 4
Average Net Income = $80,000
Therefore, Average Rate of Return on Investment = Average Net Income / Average Investment
Average Rate of Return on Investment = $80,000 / $405,000
Average Rate of Return on Investment = 19.8%
The average rate of return on investment is 19.8%
Prescott Corp. owned 90% of Bell Inc., while Bell owned 10% of the outstanding common shares of Prescott. No goodwill or other allocations were recognized in connection with either of these acquisitions. Prescott reported operating income of $266,000 for 2013 whereas Bell earned $98,000 during the same period. No investment income was included within either of these income totals. On a consolidated income statement, what is the non-controlling interest in Bell's net income?
Answer:
Non-controlling interest in Bell's net income = $136,923
Explanation:
Given:
Prescott Corp. owned 90% of Bell Inc.
Bell Inc. owned 10% Prescott Corp
Computation:
Total income of Prescott Corp = $266,000 + 90% of Bell Inc income......Eq1
Total income of Bell Inc = $98,000 + 10% of Prescott Corp income...........Eq2
From Eq1 and Eq2
Total income of Prescott Corp = $266,000 + 90%($98,000 + 10% of Prescott Corp income)
Total income of Prescott Corp = $266,000 + $88,200 + 0.09 Prescott Corp income
Total income of Prescott Corp - 0.09 Prescott Corp income = $354,200
0.91 Prescott Corp income = $354,200
Prescott Corp income = $389,230.769
Prescott Corp income = $389,231
Non-controlling interest in Bell's net income = $98,000 + 10% of Prescott Corp income
Non-controlling interest in Bell's net income = $98,000 + 10%($389,231)
Non-controlling interest in Bell's net income = $98,000 + $38,923
Non-controlling interest in Bell's net income = $136,923
A small firm makes three products, which all follow the same three-step (milling, inspection, and drilling) process. Product A requires 6 minutes of milling, 5 minutes of inspection, and 4 minutes of drilling; product B requires 2.5 minutes of milling, 2 minutes of inspection, and 2 minutes of drilling; and product C requires 5 minutes of milling, 4 minutes of inspection, and 8 minutes of drilling. The firm has 20 hours available during the next period (next week) for milling, 15 hours for inspection, and 24 hours for drilling. Product A contributes $6.00 per unit to profit, product B contributes $4.00 per unit, and product C contributes $10.00 per unit. 1 hour has 60 minutes. The firm needs to determine the quantities of product A, B, and C, with a goal of maximizing the total profit.
At the optimum solution, what is the company's profit during the next period?
How many units of each are produced at the optimal solution (use numbers)?
Answer:
At the optimum solution, what is the company's profit during the next period?
$2,070How many units of each are produced at the optimal solution (use numbers)?
180 units of product B135 units of product CExplanation:
Milling Inspection Drilling C.M.
Product A 6 5 4 $6
Product B 2.5 2 2 $4
Product C 5 4 8 $10
total time 1,200 900 1,440
Contribution margin per minute
Milling Inspection Drilling Total
Product A $1 $1.20 $1.50 $3.70
Product B $1.60 $2 $2 $5.60
Product C $2 $2.50 $1.25 $5.75
Even though product C has a higher contribution margin, its total production will be contrained by Drilling, since only 180 units can be completed (= 1,440 hours / 8 hours per unit) profits will equal $1,800.
So we must continue with product B which has the second highest contribution margin per minute with a maximum production of 450 units (Milling is the constraint). This would result in a total profit of $1,800.
The maximum production of product A is also 180 units (inspection is the constraint), which would generate only $1,080 in profits. So we can eliminate product A from the analysis.
Now we need to determine which combination of products B and C should be produced.
If we produce 180 units of product B and 135 units of product C, our total profits will be (180 x $4) + (135 x $10) = $2,070
total number of machine hours employed:
Milling Inspection Drilling
Product B 450 360 360
Product C 675 540 1,080
total 1,125 900 1,440
only 75 hours of Milling will be idle under the production schedule.
QS 6-6 Petty cash accounting LO P2 1. Brooks Agency set up a petty cash fund for $280. At the end of the current period, the fund contained $198 and had the following receipts: entertainment, $50; postage, $24; and printing, $8. Prepare journal entries to record (a) establishment of the fund and (b) reimbursement of the fund at the end of the current period.
Answer:
1a
Dr Petty cash $ 280
Cr Cash $ 280
1b
Dr Entertainment $ 50
Dr Postage $ 24
Dr Printing $ 8
Cr Cash $ 82
Explanation:
Journal entry
1a
Dr Petty cash $ 280
Cr Cash $ 280
( To record petty cash fund created)
1b
Dr Entertainment $ 50
Dr Postage $ 24
Dr Printing $ 8
Cr Cash $ 82
(50+24+8)
(To Record Petty cash replenished)
Dexo Inc. plans to launch a new version of its beverage, Lime n' Lemon. The new variant will be similar to the current Lime n' Lemon in terms of taste and packaging, but it will be fortified with vitamins and minerals. The company decides to market the new drink as Lime n' Lemon Extreme. Which of the following new product categories does this new beverage fall into?
a. New-to-the-world products
b. New-to-the-firm products
c. Improvements and revisions of existing products
d. Repositionings
Answer:
C. Improvements and revisions of existing products.
Explanation:
The new and improved product may have significantly or slightly changed. Most products fit into the revision or improvement category.
Product improvements can be quite substantial or quite minor.
There are also benefits of a product been improved which could range from:
1). Match or outperform competition.
2). Meet changing consumer needs.
3). Leverage improvements in materials or manufacturing technology.
4). Provide variety etc.
An instance can be seen for a food product one of the ingredients may be changed to enhance the taste. Or the packaging may be changed to make it easier to open or to protect the product better.
Answer:
c. Improvements and revisions of existing products
Explanation:
Dexco is planning to launch a new version of its beverage that is fortified with minerals and vitamins. Also the name it intends to use for marketing this product is Lime n Lemon Extreme.
When categorising the product it will be a modification or revision of an existing product Lime n Lemon.
This is not a new product for the company as it is produced based on idea form a previous product.
Evaluate the set of events below. Determine how the events will impact their respective markets. a. In examining the market for personal computers, a technological improvement reduces the cost of production. The effect of the event will be in . As a result, the equilibrium price will and the equilibrium quantity will . b. In examining the market for smart phones, there is a reduction in the number of sellers. The effect of the event will be in . As a result, the equilibrium price will and the equilibrium quantity will . c. In examining the market for apps for smart devices, there is a tax levied on the sellers of apps. The effect of the event will be in . As a result, the equilibrium price will and the equilibrium quantity will .
Answer:
One thing to clear ab initio is that equilibrium quantity and price are achieved when the demand and supply curves intersect at a point. Therefore, at equilibrium, the demand and supply in quantity are equal.
a) If a technological improvement reduces the cost of product, the equilibrium price will reduce and equilibrium quantity will be equal to the quantity demanded and supplied.
b) If there is a reduction in the number of sellers, the equilibrium price will increase and the equilibrium quantity will be equal to the quantity demanded and supplied.
c) If there is a tax levied on the sellers of apps, the equilibrium price will increase and the equilibrium quantity will be equal to the quantity demanded and supplied.
Explanation:
a) The market is in equilibrium when the supply and demand curves intersect, meaning that the quantity demanded and quantity supplied are equal. The price and quantity at which this intersection occurs are called the equilibrium price and equilibrium quantity respectively. In economics, when quantity supplied equals quantity demanded, an equilibrium situation is achieved, and it is represented by this equation: Qs = Qd; where Qs is quantity supplied and Qd is quantity demanded.
b) Equilibrium price reduces when there is a cost reduction and more supplies are pushed to the market to meet demand.
c) When suppliers leave the market, it means that the market price and demand are no longer attractive and beyond their individual influence. This leads to a reduction in quantity supplied overall.
d) Sales tax increases the price of goods and services, and equilibrium will be achieved when there consumers demand the product with increased price and sellers are willing to produce and sell at such a price.
The Woods Co. and the Spieth Co. have both announced IPOs at $49 per share. One of these is undervalued by $14, and the other is overvalued by $5, but you have no way of knowing which is which. You plan to buy 1,500 shares of each issue. If an issue is underpriced, it will be rationed, and only half your order will be filled. a. If you could get 1,500 shares in Woods and 1,500 shares in Speith, what would your profit be
Answer:
The profit that would result from both shares is $13,500
Explanation:
Loss would emanate from overvaluation while profit would result from undervaluation,that is the key to solving the question.
Loss from overvaluation=1,500*$5=$7,500
Profit from undervaluation=1,500*$14=$21,000
Profit from the investment =Profit from undervaluation-loss from overvaluation=$21,000-$7,500=$13,500
Lomani Ltd acquired two new machines for cash on 1 January 2017. The cost of machine A was $400 000, plus GST, and of machine B, $600 000, plus GST. Each machine was expected to have a useful life of 10 years, and residual values were estimated at $20 000 for machine A and $50 000 for machine B. Because of technological advances, Lomani Ltd decided to replace machine A. It traded in machine A on 31 March 2021 for a new machine, C, which cost $420 000. A $200 000, plus GST, trade-in was allowed for machine A, and the balance of machine C’s cost was paid in cash. Machine C was expected to have a useful life of 8 years and a residual value of $20 000. On 2 July 2021, extensive repairs were carried out on machine B for $66 000 cash. Lomani Ltd expected these repairs to extend machine B’s useful life by 4 years and it revised machine B’s estimated residual value to $19 500. Machine B was eventually sold on 1 April 2023 for $300 000, plus GST, cash. On 1 July 2023, Lomani Ltd decided to use the revaluation model for valuation of Machine C. The fair value of Machine C was assessed to be $220 000 and the future useful life was estimated to be 5 years, residual value remains the same. Lomani Ltd uses the straight-line depreciation method, recording depreciation to the nearest whole month. The end of the reporting period is 30 June. Required: Prepare general journal entries to record the above transactions and depreciation journal entries required at the end of each reporting period up to 30 June 2024. Required: Prepare general journal entries to record the above transactions and depreciation journal entries required at the end of each reporting period up to 30 June 2024
Answer:
2017
Machine A (Dr.) $400,000
Machine B (Dr.) $600,000
Cash (Cr.) $1,000,000
2018
Depreciation Expense (Dr.) $93,000
Accumulated Depreciation (Cr.) $93,000
2019
Depreciation Expense (Dr.) $93,000
Accumulated Depreciation (Cr.) $186,000
2020
Depreciation Expense (Dr.) $93,000
Accumulated Depreciation (Cr.) $279,000
2021
Machine C (Dr.) $420,000
Machine A (Cr.) $200,000
Cash (Cr.) $220,000
(To record trade in of machine A)
Repairs expense Machine B (Dr.) $66,000
Cash (Cr.) $66,000
(To record repairs of machine B)
2022
Depreciation Expense (Dr.) $79,450
Accumulated Depreciation (Cr.) $358,450
2023
Cash (Dr.) $300,000
Machine B (Cr.) $284,550
Gain on selling (Cr.) $15,450
Explanation:
Straight line depreciation recognize an assets carrying amount evenly over its useful life.
Straight line Depreciation = (Cost - Estimated Residual Value) / useful life
Depreciation expense for Machine A:
($400,000 - $20,000) / 10 years
= $38,000
Depreciation expense for Machine B:
($600,000 - $50,000) / 10 years
= $55,000
Depreciation expense for Machine C:
($420,000 - $20,000) / 8 years
= $50,000
Revised Depreciation of Machine B:
($314,000 - $19,500) / 10 years
= $29,450
The predetermined overhead rate for manufacturing overhead for 2018 is $4.00 per direct labor hour. Employees are expected to earn $5.00 per hour and the company is planning on paying its employees $100,000 during the year. However, only 75% of the employees are classified as "direct labor." What was the estimated manufacturing overhead for 2018
Answer:
$60,000= total estimated overhead costs
Explanation:
Giving the following information:
The predetermined overhead rate for manufacturing overhead for 2018 is $4.00 per direct labor hour.
Direct labor hour= $5.00 per hour
Direct labor hours= (100,000*0.75)/5= 15,000 hours
To calculate the estimated overhead costs, we need to use the following formula:
Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
4= total estimated overhead costs for the period/15,000
$60,000= total estimated overhead costs for the period
Printers Company pays a $25,000 annual membership fee to a trade association for paper wholesalers. The trade association estimates that 60% of its dues are allocated to lobbying activities. If amount is zero, enter, "0". a. Printers Company's total deductible expense for tax purposes is $ . b. Assume the same facts as above except that the $25,000 was incurred for in-house lobbying expenses. Printers Company's total deductible expense for tax purposes is $ .
Answer: a. $10,000. b. $0
Explanation:
Lobbying expenses are the money that are used to influence a legislative body either at the federal, state or local level. I'm general, the lobbying expenses are not typically deductible. The amount that was paid to the trade association which was not part of the lobbying will be as deduction.
a. We are told that the trade association estimates that 60% of its dues are allocated to lobbying activities. This means that (100% - 60%) = 40% wasn't part of the lobbying expenses. We will now find 40% of $25,000. This will be:
= 40% of $25,000
= 40/100 × $25000
= 0.4 × $25000
= $10,000
Therefore, the total deductible expense for tax purposes is $10,000
b. We are told that the $25,000 was incurred for in-house lobbying expenses. Therefore Printers Company's total deductible expense for tax purposes will be $0.
Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $280,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 3% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $1,400 before adjustment