Answer:
1999 Merger of Exxon and Mobil
The reason that made the U.S. government to require Exxon and Mobil to divest themselves of so many gas stations in localized parts of the country to be willing to allow the merger to occur is:
c. To ensure competition in these regions and protect consumers from unwarranted price increases.
Explanation:
The agreement to sell so many gas stations in localized parts of the country was to forestall antitrust lawsuits. It was also made to protect consumers from unwarranted price increases, allowing more competition in the affected areas, where ExxonMobil owed too many gas stations.
The reason why the US would require these two companies to divest themselves is because to ensure competition in these regions and protect consumers from unwarranted price increases.
The answer to this question is option c. Sometimes when two companies merge into one, they could become too powerful. When this is the case, they may end up driving out all their competitors from the market.
At this point, a monopoly may arise from the companies. When a monopoly arises, they would be able to set the price to any amount that they want. This divest option by the government was to ensure the protection of consumers from a situation of price hikes.
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Overnight Publishing Company (OPC) has $2.5 million in excess cash. The firm plans to use this cash either to retire all of its outstanding debt or to repurchase equity. The firm’s debt is held by one institution that is willing to sell it back to OPC for $2.5 million. The institution will not charge OPC any transaction costs. Once OPC becomes an all-equity firm, it will remain unlevered forever. If OPC does not retire the debt, the company will use the $2.5 million in cash to buy back some of its stock on the open market. Repurchasing stock also has no transaction costs. The company will generate $1,300,000 of annual earnings before interest and taxes in perpetuity regardless of its capital structure. The firm immediately pays out all earnings as dividends at the end of each year. OPC is subject to a corporate tax rate of 35 percent, and the required rate of return on the firm’s unlevered equity is 20 percent. The personal tax rate on interest income is 25 percent, and there are no taxes on equity distribution. Assume there are no bankruptcy costs
a. What is the value of OPC if it chooses to retire all of its debt and become an unlevered firm? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
b. What is the value of OPC if it decides to repurchase stock instead of retiring its debt? (Hint Use the equation for the value of a levered firm with personal tax on interest income i.e., V = V0 + (1 – [(1 – TC)/(1 – TB] * B-CB).) (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
c. What is the value of OPC if the expected bankruptcy costs have a present value of $400,000? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)
a. Company value
b. Company value
c. Unlevered value Levered value
Answer:
A. $4,225,000
B. $4,558,333.33
C. $4,158,333.33
Explanation:
A. Calculation to determine the value of OPC if it chooses to retire all of its debt and become an unlevered firm
Using this formula
VU= (EBIT)(1 – tC) / R0
Let plug in the formula
VU= ($1,300,000)(1 – .35) / .20
VU= $4,225,000
Therefore the value of OPC if it chooses to retire all of its debt and become an unlevered firm is $4,225,000
b. Calculation to determine the value of OPC if it decides to repurchase stock instead of retiring its debt
Using this formula
VL= VU+ {1 – [(1 – tC) / (1 – tB)}] × B
Let plug in the formula
VL= $4,225,000 + {1 – [(1 – .35) / (1 – .25)]} × $2,500,000
VL= $4,558,333.33
Therefore the value of OPC if it decides to repurchase stock instead of retiring its debt is $4,558,333.33
c. Calculation to determine the value of OPC if the expected bankruptcy costs have a present value of $400,000
Using this formula
VL= VU+ {1 – [(1 – tC) / (1 – tB)}] × B – C(B)
Let plug in the formula
VL= ($4,225,000 + {1 – [(1 – .35) / (1 – .25)]} × $2,500,000) –$400,000
VL= $4,158,333.33
Therefore the value of OPC if the expected bankruptcy costs have a present value of $400,000 is $4,158,333.33
Jennifer is preparing for a conference. For that, she needs to access various websites to secure relevant information on various companies participating in the conference. Which software application will enable her to view the websites of all the companies?
A.
Internet
B.
URL
C.
browser
D.
email
E.
malware
Answer:
C. browser
internet is the software and the browser is the application.
On May 3, 2020, Sweet Company consigned 70 freezers, costing $450 each, to Remmers Company. The cost of shipping the freezers amounted to $890 and was paid by Sweet Company. On December 30, 2020, a report was received from the consignee, indicating that 35 freezers had been sold for $740 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $200, and total installation costs of $330 on the freezers sold.
Required:
a. Compute the inventory value of the units unsold in the hands of the consignee.
b. Compute the profit for the consignor for the units sold.
c. Compute the amount of cash that will be remitted by the consignee.
Answer:
A. $16,195
B. $7,621
C. $23,816
Explanation:
a. Computation for the inventory value of the units unsold in the hands of the consignee.
Inventory value of the units unsold
First step is to calculate the Total inventory value
Inventory cost $31,500
(70 * $450)
Add Freight $890
Total inventory value $32,390
($31,500+$890)
Now let calculate the Inventory value of the units unsold
Inventory value of units unsold =($32,390 / 2)
Inventory value of units unsold =$16,195
Therefore the inventory value of the units unsold in the hands of the consignee is $16,195
b. Computation for the profit for the consignor for the units sold
Sales $25,900
(35 * $740)
Less Cost of unit sold ($16,195)
($32,390 / 2)
Less Commission ($1,554)
($25,900 * 6%)
Less Advertising ($200)
Less Installation cost ($330)
Profit for the consignor $7,621
Therefore the profit for the consignor for the units sold will be $7,621
c. Computation for the amount of cash that will be remitted by the consignee.
Sales $25,900
Less Commission ($1,554)
($25,900 * 6%)
Less Advertising ($200)
Less Installation cost ($330)
Cash remitted $23,816
Therefore the amount of cash that will be remitted by the consignee is $23,816
Recently, some college alumni started a moving service for students living on campus. They have 3 employees and are debating hiring one more. The hourly wage for an employee is $30 per hour. An average moving job takes 4 hours. The company currently does 3 moving jobs per week, but with one more employee, the company could manage 5 jobs per week. The company charges $100 for a moving job.
Instructions:
Round your answers to the nearest whole number.
a. The new employee's marginal product of labor is ______.
b. The value of that merginal product is ______.
c. The moving service should moving jobs ______- hire another worker.
Answer: a. 2
b. $200
c. Should not
Explanation:
a. The new employee's marginal product of labor is ______.
This will be:
= 5 - 3
= 2 moving jobs
b. The value of that marginal product is ______..
Since the company charges $100 for a moving job, the value of the marginal product will be:
= 2 × $100
= $200
c. The moving service should moving jobs ______- hire another worker
Marginal cost of moving 2 jobs will be:
= $30 × 4 × 2
= $240
Since the marginal cost is more than the marginal product, the company should not hire another worker.
Telfer, Inc. reported net income of $2.7 million in 2020. Depreciation for the year was $162,300, accounts receivable decreased $357,400, and accounts payable decreased $296,500. Compute net cash provided by operating activities using the indirect method.
Answer:
See below
Explanation:
Computation of net cash provided by operating activities using the indirect method
Cash flow from operating activities
Net income
$2,700,000
Adjustments to reconcile net income
Add: Decrease in accounts receivable
$357,400
Less: Decrease in accounts payable
$296,500
Add: Depreciation expense for the year
$162,300
Net cash provided by operating activities
$2,923,200
Forever Ready Company expects to operate at 88% of productive capacity during May. The total manufacturing costs for May for the production of 29,040 batteries are budgeted as follows:
Direct materials $225,100
Direct labor 82,800
Variable factory overhead 23,156
Fixed factory overhead 46,000
Total manufacturing costs $377,056
The company has an opportunity to submit a bid for 2,000 batteries to be delivered by May 31 to a government agency. If the contract is obtained, it is anticipated that the additional activity will not interfere with normal production during May or increase the selling or administrative expenses.
Required:
What is the unit cost which Forever Ready Company should not go in bidding on the government contract? Round your answer to two decimal places.
Answer:
$11.40
Explanation:
Calculation to determine the unit cost which Forever Ready Company should not go in bidding on the government contract
FOREVER READY COMPANY UNIT COST
Direct materials $7.75
($225,100/29,040)
Direct labor $2.85
($82,800/ 29,040)
Variable factory overhead $0.80
($23,156/ 29,040)
Total Per unit cost $11.40
($7.75+$2.85+$0.80)
Therefore the unit cost which Forever Ready Company should not go in bidding on the government contract is $11.40
Clampett, Incorporated, converted to an S corporation on January 1, 2020. At that time, Clampett, Incorporated, had cash ($54,000), inventory (FMV $74,000, basis $37,000), accounts receivable (FMV $54,000, basis $54,000), and equipment (FMV $74,000, basis $94,000). In 2021, Clampett, Incorporated, sells its entire inventory for $74,000 (basis $37,000). Assume the corporate tax rate is 21 percent. Clampett, Incorporated's taxable income in 2021 would have been $1,000,000 if it had been a C corporation. How much built-in gains tax does Clampett, Incorporated, pay in 2021
Answer:
$3,570
Explanation:
Particulars FMV Basis Differences
Inventory $74,000 $37,000 $37,000
Accounts receivable $54,000 $54,000 $0
Equipment $74,000 $94,000 -$20,000
Taxable gain $17,000
Tax rate = 21%
So, Built-in gains tax = Taxable gain × tax rate
= $17,000 × 21%
= $3,570
You have $12,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 10 percent. Assume your goal is to create a portfolio with an expected return of 12.30 percent. How much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)You have $12,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 10 percent. Assume your goal is to create a portfolio with an expected return of 12.30 percent. How much money will you invest in Stock X and Stock Y? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Answer:
Investment in Stock X will be = $6900
Investment in Stock Y will be = $5100
Explanation:
The expected return of a portfolio is the function of the weighted average of the individual stocks' returns that form up the portfolio. The expected return of portfolio can be calculated as follows,
Portfolio Expected Return = wA * rA + wB * rB + ... + wN * rN
Where,
w represents the weight of each stock in the portfolior represents the return of each stock in the portfolioWe know the target return for our portfolio and the individual stock's returns. To calculate the investment in each stock, we need to calculate the weightage.
Let x be the weightage of investment in Stock X and (1 - x) be the weightage of investment in Stock Y.
0.1230 = x * 0.14 + (1 - x) * 0.1
0.1230 = 0.14x + 0.1 - 0.1x
0.1230 - 0.1 = 0.04x
0.023 / 0.04 = x
x = 0.575 or 57.5%
So, investment in Stock X will be = 0.575 * 12000 = $6900
Investment in Stock Y will be = 12000 - 6900 = $5100
A male worker meets and regularly exceeds the work standards in the coding unit while the female workers in the unit usually, but not always, meet basic work standards. Based upon this information, the supervisor did not recommend a merit increase for the male worker since this increase would result in him receiving a higher wage than the female workers in the same unit. Given the scenario, determine which (if any) federal regulatory requirement has been violated
Answer:
The Federal regulatory requirement here which has been breached is Title VII of the Civil Rights Act of 1964.
Explanation:
Acording to SEC. 2000e-2. [Section 703]
"(a) Employer practices
It shall be an unlawful employment practice for an employer -
(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin; or
(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin."
The supervisor might have been attempting to create equality. However, the results of the work stand out. By refusing to reward the male worker, the supervisor has discriminated against him on the basis of his gender. His work deserves merit. The work of the female worker does not.
Hence the supervisor is in violation of the statue refered above.
Cheers
12. On December 1, 2017, Vaughn Manufacturing acquired new equipment in exchange for old equipment that it had acquired in 2014. The old equipment was purchased for $222000 and had a book value of $88270. On the date of the exchange, the old equipment had a fair value of $97000. In addition, Vaughn paid $292000 cash for the new equipment, which had a list price of $392000. The exchange lacked commercial substance. At what amount should Vaughn record the new equipment for financial accounting purposes?
Answer:
$389,000
Explanation:
Calculation to determine what amount should Vaughn record the new equipment for financial accounting purposes
Equipment Amount
Old Equipment Fair Value $97,000
Cash paid $292,000
Total $389,000
($97,000+$292,000)
Therefore The amount that Vaughn should record the new equipment for financial accounting purposes is $389,000
Bluestone Company had three intangible assets at the end of the current year:
a. A patent purchased this year from Miller Co. on January 1 for a cash cost of $3,600. When purchased, the patent had an estimated life of 12 years.
b. A trademark was registered with the federal government for $8,000. Management estimated that the trademark could be worth as much as $200,000 because it has an indefinite life.
c. Computer licensing rights were purchased this year on January 1 for $90,000. The rights are expected to have a six-year useful life to the company.
Required:
a. Compute the acquisition cost of each intangible asset.
b. Compute the amortization of each intangible for the current year ended December 31.
c. Show how these assets and any related expenses should be reported on the balance sheet and income statement for the current year.
Answer:
Bluestone Company
a. The acquisition cost of each intangible asset:
a. Patent $3,600
b. Trademark $8,000
c. Licensing Rights $90,000
b. The amortization of each intangible asset for the current year ended December 31:
a. Patent $3,600/12 = $300
b. Trademark $8,000 indefinite life $0
c. Licensing Rights $90,000/6 = $15,000
c. Balance Sheet as of December 31, of the current year:
Intangible Asset:
a. Patent $3,600
b. Trademark 8,000
c. Licensing Rights 90,000
Total Intangible $101,600
less amortization 15,300
Net book value $86,300
Income Statement for the year ended December 31 of the current year.
Amortization Expenses:
a. Patent $300
c. Licensing Rights $15,000
Explanation:
a) Data and Analysis:
a. Patent $3,600 Cash $3,600
b. Trademark $8,000 Cash $8,000
c. Licensing Rights $90,000 Cash $90,000
a. Acquisition cost of each intangible asset:
a. Patent $3,600
b. Trademark $8,000
c. Licensing Rights $90,000
b. Amortization of each intangible asset:
a. Patent $3,600/12 = $300
b. Trademark $8,000 indefinite life $0
c. Licensing Rights $90,000/6 = $15,000
Riverbed Inc., had the following condensed balance sheet at the end of operations for 2019. RIVERBED INC.
BALANCE SHEET
DECEMBER 31, 2019
Cash $8,600 Current liabilities $15,000
Current assets other than cash 28,800 Long-term notes payable 25,600
Equity invesments 19,900 Bonds payable 25,000
Plant assets (net) 67,800 Common stock 75,000
Land 40,200 Retained earnings 24,700
$165,300 $165,300
During 2020, the following occurred.
1. A tract of land was purchased for $9,000.
2. Bonds payable in the amount of $15,000 were redeemed at par.
3. An additional $10,000 in common stock was issued at par.
4. Dividends totaling $9,400 were paid to stockholders.
5. Net income was $30,500 after allowing depreciation of $13,700.
6. Land was purchased through the issuance of $22,300 in bonds.
7. Riverbed Inc. sold part of its investment portfolio for $12,800. This transaction resulted in a gain of $2,000 for the company. No unrealized gains or losses were recorded on these investments in 2020.
8. Both current assets (other than cash) and current liabilities remained at the same amount.
A. Prepare a statement of cash flows for 2014 using the indirect method.
B. Prepare the condensed balance sheet for Jobim Inc. as it would appear at December 31, 2014
Answer:
Riverbed Inc.
A. RIVERBED INC.
STATEMENT OF CASH FLOWS
DECEMBER 31, 2020
Operating activities:
Net income $30,500
Depreciation expense 13,700
Gain from investment (2,000)
Cash from operations $42,200
No changes in working capital
Net cash from operations $42,200
Investing activities:
Sale of equity investment 12,800
Purchase of land (9,000)
Financing activities:
Bonds payable (15,000)
Bonds payable 22,300
Common stock issued 10,000
Dividends paid (9,400)
Net cash from financing 7,900
Net cash flows $53,900
B. RIVERBED INC.
BALANCE SHEET
DECEMBER 31, 2020
Cash $62,500 Current liabilities $15,000
Current assets other than cash 28,800 Long-term notes payable 25,600
Equity investments 9,100 Bonds payable 32,300
Plant assets (net) 54,100 Common stock 85,000
Land 49,200 Retained earnings 45,800
$203,700 $203,700
Explanation:
a) Data and Calculations:
RIVERBED INC.
BALANCE SHEET
DECEMBER 31, 2019
Cash $8,600 Current liabilities $15,000
Current assets other than cash 28,800 Long-term notes payable 25,600
Equity investments 19,900 Bonds payable 25,000
Plant assets (net) 67,800 Common stock 75,000
Land 40,200 Retained earnings 24,700
$165,300 $165,300
Transactions during 2020:
1. Land $9,000 Cash $9,000
2. Bonds payable $15,000 Cash $15,000
3. Cash $10,000 Common stock $10,000
4. Dividends $9,400 Cash $9,400
6. Cash $22,300 Bonds $22,300
7. Cash $12,800 Investment $10,800 Gain from investments $2,000
Non-cash items:
5. Net income $30,500
Depreciation expense $13,700
Gain from investment (2,000)
Cash from operations $42,200
Retained earnings 24,700
Net income 30,500
Dividends (9,400)
Retained earnings 45,800
Cash balance:
Beginning balance $8,600
Cash from operations 42,200
Land (9,000)
Bonds repaid (15,000)
Common stock 10,000
Dividends paid (9,400)
Bonds issued 22,300
Investment sold 12,800
Ending balance $62,500
On September 15, 2021, the Scottie Company board of directors declared a 8% stock dividend on common shares. The shares are to be distributed on October 10, 2021, to shareholders of record on October 1, 2021. The market price per share on the date of declaration was $24.4 while the market price on the date of distribution was $26.4. The common stock has a par of $5 per share and there were 1,200,000 shares outstanding prior to the declaration of the stock dividend.
Required:
Prepare any necessary journal entries to record the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 Record declaration of common stock dividend. Note: Enter debits before credits. General Journal Debit Credit Date September 15, 2021 Record entry View general Journal Clear entry
Answer:
Date General Journal Debit Credit
Sept 15 Stock dividend $2,342,400
(1,200,000*8%*24.4)
Common Stock dividend distributable $480,000
(1,200,000*8%*5)
Paid in capital in excess of par- $1,862,400
Common Stock
Oct 1 No Journal entry
Oct 10 Common Stock dividend $480,000
distributable
Common Stock $480,000
The Ring Division of A1d-Y6z Company reported the following information for May: selling price per unit .................... $35 variable costs per unit ................... $12 turnover .................................. 2.50 residual income ........................... $229,600 margin .................................... 22% units sold ................................ 40,000 Calculate the number of units the Ring Division needed to sell in May in order for the residual income in May to be $505,600.
Answer:
52,000 units
Explanation:
Selling price = $35*40,000 = $1,400,000
Variable cost = $12 * 40,000 = $480,000
Contribution margin = $1,400,000 - $480,000 = $920,000
Fixed cost = Residual income + Contribution
Fixed cost = $920,000 - $229,600
Fixed cost = $690,400
Sales to earn residual income = [Fixed cost + Desired profit] / Contribution per unit
Sales to earn residual income = [$690,400 + $505,600] / $35 - $12
Sales to earn residual income = $1,196,000 / $23
Sales to earn residual income = 52,000 units
A continuous (rolling) budget A. presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels. B. presents a statement of expectations for a period of time but does not present a firm commitment. C. presents the plan for only one level of activity and does not adjust to changes in the level of activity. D.drops the current month or quarter and adds a future month or quarter as the current month or quarter is completed. E. classifies budget requests by activity and estimates the benefits arising from each activity. A continuous budget has a constant time horizon and always looks ahead the same number of periods.
Answer:
D.drops the current month or quarter and adds a future month or quarter as the current month or quarter is completed.
Explanation:
A continuous (rolling) budget is one that varies over time. It attach another month to the end of the budget as one month expires. for example, If initial budget covers the months of January to December 2018, then you may add January 2019 after January 2018 has ended.
Hence, option D is the correct answer.
Beloved Baby Company manufactures and sells children's strollers. Each stroller requires eight screws. For September, Beloved Baby Company will begin September with 360 screws in its beginning inventory. Beloved Baby Company has budgeted stroller sales of 560 strollers, while 590 strollers are scheduled to be produced. How many screws should Beloved Baby Company purchase in September
Answer:
4,360
Explanation:
Calculation to determine How many screws should Beloved Baby Company purchase in September
Using this formula
Screws to purchased in September=(Production* per screws required)- Beginning Inventory
Let plug in the formula
Screws to purchased in September=(590 × 8)-360
Screws to purchased in September= 4,720 - 360 Screws to purchased in September= 4,360
Therefore The numbers of screws that Beloved Baby Company should purchase in September is 4,360
A growing trend to "Buy American" may encourage law makers to increase political pressure for Washington to pass legislation for more restrictive quotas on Japanese car imports. In addition, a decline in the value of the US dollar would be instrumental in Toyota’s decision to build a manufacturing plant in the United States instead of continuing to export cars from Japan. If Toyota builds a plant, it’s decision would effect...
Answer: positive result from regulatory and economic environmental forces.
Explanation:
Based on the information given, if Toyota builds a plant, then the decision would reflect positive result from the regulatory and economic environmental forces.
The regulatory forces depend impact how an organization will operate. It is part of the external marketing environment of a company whereby the political efforts has an affect on a company's marketing effort.
In this case, since there is a growing trend to "Buy American", if Toyota builds a plant, rather than importing, it'll represent positive result from regulatory and economic environmental forces.
ABC issued callable bonds on January 1, 2018. ABC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 1/1/2018 $194,758 6/30/2018 $7,000 $7,790 $790 195,548 12/31/2018 7,000 7,822 822 196,370 6/30/2019 7,000 7,855 855 197,225 12/31/2019 7,000 7,889 889 198,114 6/30/2020 7,000 7,925 925 199,039 12/31/2020 7,000 7,961 961 200,000 What is the annual stated interest rate on the bonds
Answer:
7%
Explanation:
Calculation to determine the annual stated interest rate on the bonds
Using this formula
Bonds annual stated interest rate=Cash paid/Ending carrying value*2 payments per year
Let plug in the formula
Bonds annual stated interest rate=$7,000 / $200,000 × 2 payments per year
Bonds annual stated interest rate=0.07*100
Bonds annual stated interest rate= 7%
Therefore the annual stated interest rate on the bonds is 7%
Machinery purchased for $150,000 by Tom Brady Co. in 2010 was originally estimated to have a life of 12 years with a salvage value of $24,000 at the end of that time. Depreciation has been recorded for 7 years on this basis. In 2017, it is determined that the total estimated life should be 15 years with a salvage value of $18,000 at the end of that time. Assume straight-line depreciation.
Instructions:
Determine the depreciation expense for 2017.
Answer:
$7,312.50
Explanation:
The computation of the depreciation expense for 2017 is shown below:
Book Value is
= Cost - Accumulated Depreciation
= $150,000 - {[($150,000 - $24,000) ÷ 12 ] × 7y}
= $150,000 - [($126,000 ÷ 12 ) × 7]
= $150,000 - ($10,500 × 7)
= $150,000 - $73,500
= $76,500
Now the depreciation expense for 2017 :
= ($76,500 - $18,000) ÷ (15 - 7) years
= $58,500 ÷ 8 years
= $7,312.50
Finerly Corporation sells cosmetics through a network of independent distributors. Finerly shipped cosmetics to its distributors and is considering whether it should record $220,000 of revenue upon shipment of a new line of cosmetics. Finerly expects the distributors to be able to sell the cosmetics, but is uncertain because it has little experience with selling cosmetics of this type. Finerly is committed to accepting the cosmetics back from the distributors if the cosmetics are not sold. How much revenue should Finerly recognize upon delivery to its distributors
Answer:
The amount of revenue Finerly should recognize upon delivery to its distributors is $0.
Explanation:
From the question, the following two very important points can be observed:
1. Finerly expects the distributors to be able to sell the cosmetics, but is uncertain because it has little experience with selling cosmetics of this type.
2. Finerly is committed to accepting the cosmetics back from the distributors if the cosmetics are not sold.
Since there is an uncertainty that the the distributors will be able to sell the cosmetics and Finerly is committed to accepting them back from the distributors if they are not sold, these imply that the amount of sales revenue cannot be known or reasonably estimated until when the distributors actually sell the cosmetics.
Therefore, the amount of revenue Finerly should recognize upon delivery to its distributors is $0.
Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows. Sales Mix Unit Contribution Margin Lawnmowers 20 % $33 Weed-trimmers 50 % $22 Chainsaws 30 % $41 Yard Tools has fixed costs of $4,544,800. Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix. Lawnmowers units Weed-trimmers units Chainsaws units
Answer:
Results are below.
Explanation:
To calculate the break-even point in units, we need to use the following formula:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Weighted average contribution margin= 0.2*33 + 0.5*22 + 0.3*41
Weighted average contribution margin= $29.9
Break-even point (units)= 4,544,800 / 29.9
Break-even point (units)= 152,000 units
Now, for each product:
Lawnmowers= 0.2*152,000=30,400
Weed-trimmers= 0.5*152,000= 76,000
Chainsaws= 0.3*152,000= 45,600
Copper Hill Inc. manufactures laser printers within a relevant range of production of 70,000 to 100,000 printers per year. The following partially completed manufacturing cost schedule has been prepared:
Complete the following cost schedule: Round your answers to two decimal places.
Number of Printers Produced 70,000 90,000 100,000 Total costs: Total variable costs $350,000 $fill in the blank 1 $fill in the blank 2 Total fixed costs 630,000 $fill in the blank 3 $fill in the blank 4 Total costs $980,000 $fill in the blank 5 $fill in the blank 6 Cost per unit: Variable cost per unit $fill in the blank 7 $fill in the blank 8 $fill in the blank 9 Fixed cost per unit $fill in the blank 10 $fill in the blank 11 $fill in the blank 12 Total cost per unit $fill in the blank 13 $fill in the blank 14 $fill in the blank 15
Answer:
70,000 90,000 100,000
Total variable costs $350,000 $450,000 $500,000
Total fixed costs $630,000 $630,000 $630,000
Total Costs $980,000 $1,080,000 $1,130,000
variable costs per unit $5 $5 $5
fixed cost costs per unit $9 $7 $6.30
total cost per unit $14 $12 $11.30
Explanation:
Fixed costs are costs that do not vary with output. e,g, rent, mortgage payments
If production is zero or if production is a million, Mortgage payments do not change - it remains the same no matter the level of output.
Hourly wage costs and payments for production inputs are variable costs
Variable costs are costs that vary with production
If a producer decides not to produce any output, there would be no need to hire labour and thus no need to pay hourly wages.
fixed cost would remain the same regardless of the number of output. Fixed cost would be $630,000 for 90,000 and 10,000 unit of output
fixed cost per unit = total fixed cost / output
$630,000 / 70,000 = $9
$630,000 / 90,000 = $7
$630,000 / 100,000 = $6.30
to determine the total variable cost for quantities, 90,000 and 10,000, the average variable cost has to be determined
Average variable cost = total variable cost / output
$350,000 / 70,000 = $5
Average total cost = average fixed cost + average variable cost
total variable cost for output 90,000 = $5 x 90,000 = $450,000
total variable cost for output 100,000 = $5 x 100,000 = $500,000
total cost = total fixed cost + total variable cost
total cost for output 90,000 = $450,000 + $630,000 = $1,080,000
total cost for output 100,000 = $500,000 + $630,000 = $1,130,000
The comparative balance sheets and income statement for Bingky Barnes Inc. are as follows:
Current Year Prior Year
Balance sheet at December 31
Cash $37,300 $29,400
Accounts receivable 32,700 28,900
Merchandise inventory 42,000 38,300
Property and equipment 121,500 100,800
Less: Accumulated depreciation (30,700) (25,300)
$202,800 $172,100
Accounts payable $36,700 $27,900
Accrued wages expense 1,400 1,800
Note payable, long-term 44,500 50,800
Common stock and additional paid-in capital 89,600 72,900
Retained earnings 30,600 18,700
$202,800 $172,100
Income statement for current year Sales $123,000
Cost of goods sold 73,000
Other expenses 38,100
Net income $11,900
Additional Data:
a. Equipment bought for cash, $20.700.
b. Long-term notes payable was paid off for $4,800.
c. Issued new shares of stock for $16,400 cash.
d. No dividends were declared or paid.
e. Other expenses included depreciation, $5,200, wages, $20,100; taxes, $6,100; other, $6,500 f. Assume that expenses were fully paid in cash, when there are no liabilities account related to them. For example, tax expenses are paid in cash since there is no taxes payable.
Required:
Prepare the statement of cash flows for the year ended December 31, current year, using the Indirect method.
Answer:
Bingky Barnes Inc.
Statement of Cash Flows for the year ended December 31, Current Year
(using the indirect method)
Operating activities:
Net income $11,900
Add non-cash expenses:
Depreciation 5,400
Adjusted operating $17,300
Changes in working capital:
Accounts receivable -3,800
Merchandise inventory -3,700
Accounts payable +8,800
Accrued wages expense -400
Net operating cash flow $18,200
Investing activities:
Property & equipment -$20,700
Financing activities:
Note payable, long-term -6,300
Common stock and
additional paid-in capital +16,700
Net cash from financing $10,400
Net cash flows $7,900
Explanation:
a) Data and Calculations:
Comparative balance sheets and income statement
Current Year Prior Year Change
Balance sheet at December 31
Cash $37,300 $29,400 +7,900
Accounts receivable 32,700 28,900 +3,800
Merchandise inventory 42,000 38,300 +3,700
Property and equipment 121,500 100,800 +20,700
Less: Accumulated depreciation (30,700) (25,300)
Total assets $202,800 $172,100
Accounts payable $36,700 $27,900 +8,800
Accrued wages expense 1,400 1,800 -400
Note payable, long-term 44,500 50,800 -6,300
Common stock and
additional paid-in capital 89,600 72,900 +16,700
Retained earnings 30,600 18,700
Total liabilities and equity $202,800 $172,100
Income statement for current year
Sales $123,000
Cost of goods sold 73,000
Other expenses 38,100
Net income $11,900
Additional Data:
a. Equipment bought for cash, $20,700
b. Long-term notes payable was paid off for $4,800?
c. Issued new shares of stock for $16,400 cash.
d. No dividends were declared or paid.
e. Other expenses:
Depreciation, $5,400
Wages 20,100
Taxes, 6,100
Other, 6,500
f. Assume that expenses were fully paid in cash, when there are no liabilities account related to them. For example, tax expenses are paid in cash since there is no taxes payable.
Wages Payable
Beginning balance $1,800
Wages expense $20,100
Ending balance 1,400
Cash paid 19,700
Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 6 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 8 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: Cash Paid Interest Expense Amortization Balance January 1, Year 1 $948 December 31, Year 1 $60 $76 $16 964 December 31, Year 2 60 77 17 981 December 31, Year 3 60 79 19 1,000 Required: 1. What was the bond's issue price
Answer:
Total of amortisation for 3 years = 16+17+19 = 52
Bonds issue price = 1000 - 52 = $948
I hope this helps a little bit.
Presented below is information related to copyrights owned by Sunland Company at December 31, 2020.
Cost $8,520,000
Carrying amount 4,470,000
Expected future net cash flows 4,020,000
Fair value 3,450,000
Assume that Sunland Company will continue to use this copyright in the future. As of December 31, 2020, the copyright is estimated to have a remaining useful life of 10 years.
Required:
a. Prepare the journal entry to record the impairment of the asset at December 31, 2020. The company does not use accumulated amortization accounts.
b. Prepare the journal entry to record amortization expense for 2021 related to the copyrights.
Answer:
a.
Debit : impairment $450,000
Credit : Accumulated impairment $450,000
b.
Debit : amortization $40,200
Credit : Accumulated amortization $40,200
Explanation:
Journal entry to record the impairment of the asset at December 31, 2020.
Journal entry to record amortization expense for 2021 related to the copyrights.
On January 8, 2012, Speedway Delivery Service purchased a truck at a cost of $65,000. Before placing the truck in service, Speedway spent $4,000 painting it, $2,500 replacing tires, and $8,000 overhauling the engine. The truck should remain in service for five years and have a residual value of $6,000. The truck’s annual mileage is expected to be 22,000 miles in each of the first four years and 12,000 miles in the fifth year—100,000 miles in total. In deciding which depreciation method to use, David Greer, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance).
Requirements
1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value.
2. Speedway prepares financial statements using the depreciation method that reports the highest net income in the early years of asset use. For income tax purposes, the company uses the depreciation method that minimizes income taxes in the early years. Consider the first year that Speedway uses the truck. Identify the depreciation methods that meet the general manager’s objectives, assuming the income tax authorities permit the use of any of the methods.
Answer:
Speedway Delivery Service
1. Depreciation Schedules:
Depreciation Schedule (Straight-line Method)
Date Cost Value Depreciation Accumulated Net Book
Expense Depreciation Value
December 31, 2012 $79,500 $14,700 $14,700 $64,800
December 31, 2013 $79,500 $14,700 $29,400 $50,100
December 31, 2014 $79,500 $14,700 $44,100 $35,400
December 31, 2015 $79,500 $14,700 $58,800 $20,700
December 31, 2016 $79,500 $14,700 $73,500 $6,000
Depreciation Schedule (Units-of-production Method)
Date Cost Value Depreciation Accumulated Net Book
Expense Depreciation Value
December 31, 2012 $79,500 $16,170 $16,170 $63,330
December 31, 2013 $79,500 $16,170 $32,340 $47,160
December 31, 2014 $79,500 $16,170 $48,510 $30,990
December 31, 2015 $79,500 $16,170 $64,680 $14,820
December 31, 2016 $79,500 $8,820 $73,500 $6,000
Depreciation Schedule (Double-declining-balance Method)
Date Cost Value Depreciation Accumulated Net Book
Expense Depreciation Value
December 31, 2012 $79,500 $31,800 $31,800 $47,700
December 31, 2013 $79,500 $19,080 $50,880 $28,620
December 31, 2014 $79,500 $11,448 $62,328 $17,172
December 31, 2015 $79,500 $6,869 $69,197 $10,303
December 31, 2016 $79,500 $4,303 $73,500 $6,000
2. The straight-line method reports the highest net income in the early years while the double-declining-balance method minimizes the income taxes in the early years.
Explanation:
a) Data and Calculations:
January 8, 2012:
Purchase of a delivery truck = $65,000
Cost of painting the truck = 4,000
Cost of replacing the tires = 2,500
Cost of overhauling the engine 8,000
Total costs = $79,500
Residual value = 6,000
Depreciable amount = $73,500
Estimated useful life = 5 years
Straight-line depreciation Method:
Annual depreciation expense = $14,700 ($73,500/5)
Units-of-production Method:
Depreciation rate per mile = $0.735 ($73,500/100,000)
For 22,000 miles, depreciation expense = $16,170 ($0.735 * 22,000)
For 12 ,000 miles, depreciation expense = $8,820 ($0.735 * 12,000)
Double-declining-balance method:
Depreciation rate = 100/5 * 2 = 40%
First year's depreciation expense = $31,800 ($79,500 * 40%)
Declined balance = $47,700 ($79,500 - $31,800)
Second year's depreciation expense = $19,080 ($47,700 * 40%)
Declined balance = $28,620 ($47,700 - $19,080)
Third year's depreciation expense = $11,448 ($28,620 * 40%)
Declined balance = $17,172 ($28,620 - $11,448)
Fourth year's depreciation expense = $6,869 ($17,172 * 40%)
Declined balance = $10,303 ($17,172 - $6,869)
Fifth year's depreciation expense = $4,303 ($10,303 - $6,000)
Financial Statements
99
7. The following is the list of balances extracted from the books of Anda Trading as at
30 November 20X2.
RM
100
9,000
12,840
26,500
14,000
50,000
Particulars
Petty cash
Cash at bank
Accounts receivable
Inventory as at 1 December 20X1
Motor vehicles
Plant and machinery
Long-term investments
Freehold premises
Accounts payable
10% Mortgage on freehold premises
Capital on 1 December 20X1
Purchases
Wages and salaries
Rates and taxes
Interest on mortgage
10,000
147,500
16,500
34,000
219,840
128,900
General expenses
Carriage outwards
Insurance premium
Drawings
Carriage inwards
Advertising expenses
Sales
70,300
1,000
1,700
2,000
21,000
3,000
7,400
600
14,000
250,000
1,000
Sales returns
Purchases returns
500
Discount received
600
Discount allowed
800
Allowance for doubtful debt
200
Inventory on hand as at 30 November 20X2 was RM30,000.
You are required to prepare the statement of profit or loss for the year ended
30 November 20X2 and a statement of financial position as at that date.
Answer:
RM
Explanation:
because they are forming the books of Anda Trandig.
You have purchased a small medical office building in Hoboken for $3,500,000 and financed the acquisition by borrowing $2,500,000 in the form of a 5-year mortgage with a 30-year amortization period. If the loan has an 8% interest rate and payments are made on an annual basis, what is the mortgage interest deduction you receive in the first year
Answer:
$200,000
Explanation:
Interest calculation is based on the Principle amount of $2,500,000 borrowed .
$165,000 to $198,600. Variable costs and their percentage relationship to sales are sales commissions 7%, advertising 5%, travel 3%, and delivery 1%. Fixed selling expenses will consist of sales salaries $35,400, depreciation on delivery equipment $6,700, and insurance on delivery equipment $1,300. Prepare a monthly selling expense flexible budget for each $11,200 increment of sales within the relevant range for the year ending
Answer:
see explanation
Explanation:
Use the $11,200 increment of sales only. Then effect expenses dependable on the sales. Find the total.
Zing Coffee Company produces Columbian coffee in batches of 6,500 pounds. The standard quantity of materials required in the process is 6,500 pounds, which cost $6 per pound. Columbian coffee can be sold without further processing for $9 per pound. Columbian coffee can also be processed further to yield Decaf Columbian, which can be sold for $12 per pound. The processing into Decaf Columbian requires additional processing costs of $10.230 per batch. The additional processing will also cause a 5% loss of product due to evaporation.
a. Prepare a differential analysis dated October 6, 2014 on whether to sell regular Columbian (Alternative 1) or process further into Decaf Columbian (Alternative 2).
b. Determine the price of Deaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian.
Answer:
Zing Coffee Company
a. Differential Analysis:
Sell Regular Process Further Differential Effect
Columbian Into Decaf On Income
(Alternative 1) (Alternative 2) Alternative (2)
Revenues $58,500 $74,100 $15,600
Costs 39,000 49,230 10,230
Income (loss) $19,500 $24,870 $5,370
b. The Price of Decaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian is:
= $11.18 approx.
Explanation:
a) Data and Calculations:
Production batches = 6,500
Standard quantity of materials required in the process = 6,500 pounds
Cost of unit = $6
Total cost = $39,000
Selling price of regular Columbian coffee = $9 per pound
Revenue from regular Columbian coffee = $58,500
Selling price of Decaf Columbian coffee = $12 per pound
Additional processing costs = $10,230 per batch
Total cost after further processing = $49,230 ($39,000 + $10,230)
Loss during further processing = 5% of 6,500 = 325
Total quantity of Decaf Columbian coffee = 6,175
Total Sales revenue = $74,100 ($12 * 6,175)
Differential Analysis:
Sell Regular Process Further Differential Effect
Columbian Into Decaf On Income
(Alternative 1) (Alternative 2) Alternative (2)
Revenues $58,500 $74,100 $15,600
Costs 39,000 49,230 10,230
Income (loss) $19,500 $24,870 $5,370
Price of Decaf Columbian that would cause neither an advantage nor a disadvantage for processing further and selling Decaf Columbian is computed as follows:
Estimated revenue of the Decaf = $68,730 ($19,500 + $49,230)
Estimated selling price = $11.18 ($68,730/6,150)