Answer:
Gordon Company
Analysis of Transactions at December 31:
a. Office Supplies $670 (DR)
Office Supplies Expense $1,630 (DR)
b. Equipment $23,500 (DR)
Accumulated Depreciation on Equipment $2,350 (CR)
Depreciation Expense - Equipment $2,350 (DR)
c. Prepaid Insurance $630 (DR)
Insurance Expense $210 (DR)
Explanation:
1. The Office Supplies Account will be debited with $2,300 and credited with $1,630 ($2,300 - $670) as Office Supplies Expense (used supplies) for the year. This will leave a debit balance of $670 in the account.
2. The equipment account will be maintained at its cost, while a contra account (accumulated depreciation) is created to accumulate the depreciation expenses over the years. The useful life of the equipment is 10 years ($23,500/$2,350) with an annual depreciation expense of $2,350.
3. The Prepaid Insurance Account will be debited with $840 and credited with $210 ($840/4) representing Insurance that expired during the year for six months. The balance of $630 is carried forward for the remaining one and half years.
A tax system in which the tax rate on everyone's first $10,000 of income is 10 percent, the tax rate on everyone's second $10,000 of income is 15 percent, and the tax rate on all income over $20,000 is 25 percent is a(n):
Answer:
The appropriate response is "Progressive tax".
Explanation:
Progressive taxation appears to mean that the tax rate is higher for increased organizations as well as lower for low-income communities. Whenever the taxable income leads to higher, the above tax rate tends to increase. The approximately equal tax rate would be taxation that is set regardless including its up or down in tax liability.So that above is the correct answer.
Hollister Company amended its defined benefit pension plan at the beginning of 2020 and recognized prior service cost of $1,700,000.
The company has collected the following additional information for the year 2020:
Service cost $400,000
Interest on the PBO 190,000
Amortization of prior service cost 170,000
Actual and expected return on plan assets 110,000
Plan funding was $700,000
Benefit payments to retirees totaled $390,000
The net increase to the PBO for 2020 is:_________.
a. $ 770,000.
b. $ 1,900,000.
c. $ 1,730,000.
d. $ 650,000.
Answer: b. $ 1,900,000
Explanation:
The Net Increase in PBO can be calculated by the formula;
= Prior service cost + Service cost + Interest on the PBO - Benefits paid
= 1,700,000 + 400,000 + 190,000 - 390,000
= $1,900,000
Credit Losses Based on Accounts Receivable At December 31, Schuler Company had a balance of $364,900 in its Accounts Receivable account and a credit balance of $4,200 in the Allowance for Doubtful Accounts account. The accounts receivable T-account consisted of $370,000 in debit balances and $5,100 in credit balances. The company aged its accounts as follows:
Current $303,000
0-60 days past due 42,000
61-180 days past due 17,000
Over 180 days past due 8,000
$370,000
In the past, the company has experienced credit losses as follows: 1% of current balances, 5% of balances 0-60 days past due, 15% of balances 61-180 days past due, and 40% of balances over six months past due. The company bases its allowance for doubtful accounts on an aging analysis of accounts receivable.
Required:
a. Prepare the adjusting entry to record the allowance for doubtful accounts for the year.
b. Show how Accounts Receivable (including the credit balances) and the Allowance for Doubtful Accounts would appear on the December 31 balance sheet.
Answer:
a. First calculate the adjusting entry to record allowance.
Uncollectible for the year is;
= (303,000 * 1%) + (42,000 * 5%) + (17,000 * 15%) + (8,000 * 40%)
= $10,880
Adjusting entry = Uncollectable amount - Credit balance on allowance
= 10,880 - 4,200
= $6,680
DR Bad Debt Expense $6,680
CR Allowance for Doubtful accounts $6,680
b.
Current Assets:
Accounts Receivable $370,000
Less: Allowance for doubtful accounts ($10,880)
$359,120
Current Liabilities
Customers Overpayments $5,100
The current liability above arises from the credit balance of $5,100 in the Accounts receivable account. Accounts Receivable should have a debit balance so if a credit balance occurs it is an overpayment by a customer.
Read the information about 2 competing credit cards.
Credit card 1 would be the better option if the borrow:
A. Had major expenses in the first year.
B. Spent a lot of money in the second year.
C. Used the card regularly in the long term.
D. Carried a large balance in the long term.
Answer: A. Had major expenses in the first year.
Explanation: It just makes sense and it’s also correct
Anna Garden recently opened her own basketweaving studio. She sells finished baskets in addition to selling the raw materials needed by customers to weave baskets of their own. Unfortunately, owing to space limitations, Anna is unable to carry all varieties of kits originally assembled and must choose between two basic packages.
The Basic Kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Anna $16 and sells for $30. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Anna produces the Stage 2 kit by using the materials included in the Basic Kit. Because she is more efficient at cutting and dying reeds than her average customer, Anna is able to produce two Stage 2 kits in one hour from one Basic Kit. (She values her time at $18 per hour.) The Stage 2 kit sells for $36.
Prepare an incremental analysis for Anna's basket weaving studio.
Answer:
Stage 1 kit Stage 2 kit Differential amount
Selling price $30 $36 $6
Materials cost ($16) ($16) $0
per unit
Additional labor $0 $18/2 = ($9) ($9)
cost per unit
Contribution margin $14 $11 ($3)
per unit
Anna will lose $3 for every Stage 2 kit that she sells. Only if he is able to sell a much higher quantity of Stage 2 kits would it be worth it, but under current conditions Anna should focus on selling Stage 1 kits.
Where do the resources come from to continue to expand the production of watermelons
Explanation:
A production of watermelons or any agrarian resource, needs specific resources to continue expanding production, because unlike an organization that produces durable goods, a company that produces watermelons needs more than machines and equipment, it primarily needs a farm with ideal land for planting and growing watermelons.
The resources also come from government subsidies, workers, equipment, investments, etc.
Strategic PlanningImagine that IBM has decided to diversify into the telecommunications business to provide online cloud-computing data services and broadband access for businesses and individuals. What method would you recommend that IBM pursue to enter this industry? Why?
Answer:
IBM could either diversify by the strategy of market penetration, which consists in increasing the market share in a particular sector (in this case, cloud computing) through more marketing efforts.
Or it could integrate horizontally, acquiring a possible competitor that is more advanced in the cloud-computing business. Or even a start-up with good prospects, because with the amount of capital that IBM has, it could more easily expand the start-up operation as a new internal business division.
ABC Corp. received a 3-month, 8% per year, $1, 500 note receivable on December 1. The adjusting entry on December 31 will include a:___________ a) debit to interest Revenue of $10 b) credit to interest Receivable of $20 c) credit to interest Revenue of $30 d) debit to interest Receivable of $10
Answer:
Option D is the correct answer.
d) debit to interest Receivable of $10
Explanation:
Under the accrual basis or principle of accounting, we match the revenue with the expenses and record the transactions in the period to which they relate to rather than when the cash is paid or received. This means that the interest receivable that is accrued for time period relating to this year should be recorded as a revenue in the current period and as an asset under interest receivable as it will be received in the next period.
Thus, the interest on the note relating to 1 month of December will be recorded as follows,
Interest Revenue = 1500 * 0.08 * 1/12 = 10
31 Dec 2021
Interest Receivable 10 Dr
Interest Revenue 10 Cr
An optimal procedure for organizations to accept projects is to specify a return on investment (ROI) and fund only projects that meet this criterion. A. True B. False
Answer:
False
Explanation:
Capital budgeting is needed in any project work as it entails the process and procedures taken in evaluation and selection of long-term investments that are consistent with the firm's goal of maximizing owner's wealth.
Normally, before a company invest or undergo any project, background work is done to know if the project will yet profit or no, feasibility study is carried out and things are put in place. If it is favourable for the firm and profit is high, firms may choose to invest after weighing the pros and cons (advantage and disadvantage) of the project before investment. So return of investment initial investment is not really considered when taking up a project as all project is done at their own risk.
Major areas in business decision making
Answer:
it is investment decision, financing decision and dividend decision
Explanation:
The major areas in business decision making are:
1 Investment decision
2. Financial decision
3.Dividend decision
Which situation best illustrates an effect of the law of demand?
A. A car company increases sales when incomes rise in a city.
B. More children go to a theme park after a competing park shuts
down.
C. Customers stop going to a restaurant after it raises its prices.
D. A shop orders more computers when their selling price increases.
The correct answer is C
Answer: C. Customers stop going to a restaurant after it raises its prices
Explanation: (apx)
The person granting another person to act on their behalf using a power of attorney is called a _______________. A) Potentate B) Premier C) Principal D) Agent E) None of the above Mark for follow up
Answer:
Principal
Explanation:
Because in many industries the cost of generating new ideas is so high, firms must charge a price ________ cost.a. equal to the marginalb. higher than the marginalc. lower than the marginald. equal to the average fixede. lower than the average fixed
Answer:
B. higher than the marginal
Explanation:
Marginal cost can be defined as the additional or extra cost that is being incurred by a company as a result of the production of an additional unit of a product or service.
Generally, marginal cost can be calculated by dividing the change in production costs by the change in level of output or quantity.
Because in many industries the cost of generating new ideas is so high, firms must charge a price higher than marginal cost in order to maximize profits or increase the amount of profits generated.
The envelope method, notebook and pencil, and online software are all methods of ______.
estimating your unexpected expenses
planning for your future
tracking your spending
understanding your current expenses
Answer:
tracking your spending
Explanation:
In personal and business activities inner needs to track spending in order to know financial status and budget effectively with available funds.
Without tracking spending there is tendency that waste will occur and spending on unimportant items will occur.
The envelop method entails having money for each category of spending in different envelops. At the end of a period you can check the envelops to see how much has been spent in each category.
Notebook and pencil involves writing down expenses.
Online software such as QuickBooks can be used to track how much an individual or business has spent.
Answer:
C. tracking your spending
Explanation:
Use the information for the question(s) below. Rosewood Industries has EBIT of $450 million, interest expense of $175 million, and a corporate tax rate of 35% If Rosewood had no interest expense, its net income would be closest to:___________ a. $430 million b. $160 million c. $290 million d. $405 million
Answer:
$180 million
Explanation:
Net income is calculated as;
= (EBIT - Interest expense)(1 - tax)
Given that;
EBIT = $450 million
Interest expense = $175 million
Tax = 35%
Net income = (450 - 175)(1 - 0.35)
Net income = (275)(0.65)
Net income = $178.75
Net income = $180 million approximated.
Rosewood's net income is closest to $180 million.
Assuming that the price elasticity of demand for slinkys (slinkys are a metal spring-like children's toy) is 2, an increase in the price of slinkys of 15% would result in (for slinkys) ___________a. an increase in the quantity supplied of 30%b. a decrease in demand of 30%c. a decrease in the quantity demanded of 7.5%d. a decrease in the quantity demanded of 30%
Answer: d. a decrease in the quantity demanded of 30%
Explanation:
Price elasticity of a good is used to measure the magnitude of change in the quantity demanded of the good as a result of a change in price.
Price elasticity = Change in Quantity demanded / Change in Price
2 = Change in quantity demanded / 15%
Change in Quantity demanded = 2 * 15% = 30%
The elasticity is listed as positive but is supposed to be negative even though this can cause confusion. Normal goods are assumed to have a negative elasticity so unless stated otherwise, assume elasticity is negative.
This is why the change is a decrease in quantity demanded.
Selected transactions for Sheridan Company are presented below in journal form (without explanations).
Date Account Title Debit Credit
May 5 Accounts Receivable 4,400
Service Revenue 4,400
12 Cash 1,930
Accounts Receivable 1,930
15 Cash 2,190
Service Revenue 2,190
Post the transactions to T-accounts. (Post entries in the order of journal entries presented in the question.)
Cash
5/55/125/15 5/55/125/15
5/55/125/15 5/55/125/15
Accounts Receivable
5/55/125/15
5+55+125+15=555555555....
Compute the standard cost for one hat, based on the following standards for each that:_______. Standard material: 3/4 yard of fabric at $5.00 per yard Standard labor: 2 hours at $5.75 per hour Factory overhead: $3.20 per direct labor hourRound your answer to two decimal places. Total standard cost $______
Answer:
$21.65
Explanation:
Computation for the Total standard cost
Using this formula
Total standard cost = Material cost + Labor cost + Overhead cost
Let plug in the formula
Total standard cost = 3/4*5 + 2*5.75 + 3.2*2
Total standard cost= $21.65
Therefore the Total standard cost will be $21.65
As an independent student Sally borrowed $4,000 her first semester of college through an Unsubsidized Stafford loan at 6.8% APR, compounded monthly. After her first semester, Sally was able to work her way through school and she graduated three years later without any additional loans. Since Sally did not make any loan payments while she was in school, what is her loan balance upon graduation? a) $4,000.00 b) $4,902.36 c) $7,869.48 d) $7,834.82
Answer:
CPT FV=4902.3689
Explanation:
By using financial calculator:
Given:
PMT = $0
PV = $4,000
N = 12x3 = 36 times
I/Y = 6.8% / 12
By using excel formulas
=FV(6.8%/12,12*3,0,4000)
Future value = $4,902.3689
CPT FV=4902.3689
Green House operates a commercial plant nursery where it propagates plants for garden centers throughout the region.
Green House has $5,100,000 in assets. Its yearly fixed costs are $650,000, and the variable costs for the potting soil, container, label, seedling, and labor for each gallon-size plant total $1.90.
Green House's volume is currently 500,000 units. Competitors offer the same plants, at the same quality, to garden centers for $4.25 each. Garden centers then mark them up to sell to the public for $9 to $12, depending on the type of plant.Read the requirements
Requirement 1.
Green House's owners want to earn an 11% return on investment on the company's assets. What is
Green House's target full product cost?
Revenue at current market price ?
Less:Desired profit ?
Target full product cost ?
Requirement 2. Given Green House's current costs, will its owners be able to achieve their target profit? Begin by calculating Green House's current full product cost.
Current variable costs ?
Plus:Current fixed costs ?
Current full product cost ?
Requirement 3. Assume Green House has identified ways to cut its variable costs to $1.75 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the company to achieve its target profit?Begin by calculating Green House's new target fixed cost.
Target full product cost ?
Less:Variable costs ?
Target fixed cost ?
Requirement 4.
Green House started an aggressive advertising campaign strategy to differentiate its plants from those grown by other nurseries.
Green House does not expect volume to be affected, but it hopes to gain more control over pricing. If Green House has to spend $145,000 this year to advertise and its variable costs continue to be $1.75 per unit, what will its cost-plus price be?
Begin by calculating the cost-plus price per unit. (Round your answer to the nearest cent.)
Current variable costs ?
Plus:Fixed costs ?
Full product cost ?
Plus:Desired profit ?
Target revenue ?
Divided by:Number of units ?
Cost-plus price per unit ?
Answer:
1. Revenue at current market price $2,125,000 (500,000 units * $4.25)
Less: Desired profit $561,000 ($51,000,000 * 11%)
Target full product cost $1,564,000
2. Current variable costs $950,000 (500,000 units * $1.90)
Add: Current fixed costs $650,000
Current full product cost $1,600,000
Answer: No, the owner will not be able to meet its desired profits because the above product cost is still more than target cost of $ 1,564,000
3. Target full product cost $1,564,000
Less: Variable costs $875,000 (1.75*500,000 units)
Target fixed cost $689,000
Answer: Yes, now the company will be able to meet its target profit because the target Fixed cost calculated above is MORE than actual Fixed Cost of $ 650,000
4. Current variable costs $875,000
Add: Fixed costs $795,000
($650,000 + $145,000)
Full product cost $1,670,000
Add: Desired profit $561,000
($51,000,000 x 11%)
Target revenue $2,231,000
Cost-plus price per unit = Target revenue / Number of units
Cost-plus price per unit = $2,231,000 / 500,000 units
Cost-plus price per unit = $4.46
QUESTION 14
Which of the following is not true when describing an Exchange?
Each part has something that might be of value to the other party
Three or more parties must be involved
Each party is capable of communication and delivery
Each party believes it is appropriate or desirable to deal with the other party
Each party is free to accept or reject the exchange offer
Answer:
this is my answer hopes it helps you
Explanation:
Each party believes it is appropriate or desirable to deal with the other party
Why would a large publically traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares?
A. the rate of return the corporation promised will be more difficult to deliver
B. more shares will dilute the existing value of the stock, causing its market price to fall
C. the market will view the new share issue as a sign the company is in financial difficulty
D. issuing bonds is a more secure method for corporations to raise needed money
Answer:
B. more shares will dilute the existing value of the stock, causing its market price to fall
Explanation:
A bond can be defined as a debt or fixed investment security, in which a bondholder (creditor or investor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time.
Generally, the bond issuer is expected to return the principal at maturity with an agreed upon interest to the bondholder, which is payable at fixed intervals.
The reason a large publicly traded corporation would likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares is because more shares will dilute the existing value of the stock, causing its market price to fall and may negatively affect by reducing the value and proportional ownership of the investor's shares in the corporation.
Scubapro Corporation currently has 500,000 shares of common stock outstanding and plans to issue 200,000 more shares in a seasoned equity offering. The current shareholders have pre-emptive rights on any new issues of common stock by Scubapro Corporation. How many shares would an investor who currently has 20,000 shares, have the right to buy if she exercises her pre-emptive right?A) 200,000 shares.
B) 120,000 shares.
C) 20,000 shares.
D) 12,000 shares.
E) 8,000 shares.
Answer:
Scubapro Corporation
The investor who currently has 20,000 shares has the right to buy this number of shares, if she exercises her preemptive right:
E) 8,000 shares.
Explanation:
Data and Calculations:
Outstanding common stock = 500,000
Planned issue of additional shares = 200,000
Proportion of new issue to outstanding = 0.40 (200,000/500,000)
For an investor with 20,000 shares, she has the right to buy 8,000 (20,000 * 0.40) additional shares.
Which of the following is a type of liability?
A. A revenue stream
B. A liquid asset
C. Accounts payable
D. Accounts receivable
Answer:
c
Explanation:
The price of cups increased from $3.75 to $4.05 and the quantity demanded of plates decreased from 4,950 to 4,450. Calculate the cross-price elasticity of demand for plates. Round your answer to the nearest hundredth.
Answer:Cross elasticity of demand = -1.25
Explanation:
Cross elasticity of demand= Per entage change in quantity of commodity A (plates)/ Percentage change in price of commodity B(cups)
Percentage change in quantity demanded for plates = (New quantity - old quantity/ old quantity ) x 100
={ (4450-4950)/4950] ×100
=-500/4950
= - 0.10×100= - 10%
Percentage change in price of cups =(New price - old price/ old price) x 100 [(4.05-3.75)/3.75]×100
=0.3/ 3.75
= 0.08×100= 8%
Cross price elasticity of demand = - 10%/8%
= - 1.25
Here, the cross elasticity of demand for these goods of cups and plates is negative(-1.25) showing that they are complementary goods since as the price for cups increases, the demand for plates decreased.
Some recent financial statements for Smolira Golf Corp. follow:
SMOLIRA GOLF CORP.
2014 and 2015 Balance Sheets
Assets Liabilities and Owners' Equity
2014 2015 2014 2015
Current assets Current liabilities
Cash $ 24,056 $ 24,200 Accounts payable $ 23,284 $ 27,200
Accounts receivable 12,548 15,300 Notes payable 12,000 10,900
Inventory 25,592 27,200 Other 11,671 15,900
Total $62,196 $ 66,700 Total $ 46,955 $ 54,000
Long-term debt $ 90,000 $103,000
Owners' equity
Common stock and
paid-in surplus $42,000 $42,000
Accumulated retained
earnings 208,936 233,000
Fixed assets
Net plant and
equipment $325,695 $365,300 Total $250,936 $275,000
Total assets $387,891 $432,000 Total liabilities and
owners' equity $387,891 $432,000
SMOLIRA GOLF CORP.
2015 Income Statement
Sales $336,329
Cost of goods sold 231,000
Depreciation 21,600
Earnings before interest and taxes $ 83,729
Interest paid 14,400
Taxable income $ 69,329
Taxes (35%) 24,265
Net income $45,064
Dividends $21,000
Retained earnings 24,064
1. The company's profit margin is __________ percent.
2. The total asset turnover is __________ times.
3. The equity multiplier is __________ times.
4. Using the Du Pont Identity, the company's ROE is __________ percent.
Answer:
1. The company's profit margin is 13.4% percent.
profit margin = net income / net sales = $45,064 / $336,329 = 13.4%
2. The total asset turnover is 0.82 times.
asset turnover ratio = net sales / average assets = $336,329 / [($387,891 + $432,000)/2] = $336,329 / $409,945.50 = 0.82
3. The equity multiplier is 1.7 times.
equity multiplier = average total assets / average total equity = $409,945.50 / [($205,936 + $275,000)/2] = $409,945.50 / $240,468 = 1.70
4. Using the Du Pont Identity, the company's ROE is 18.68% percent.
ROE = profit margin x asset turnover x equity multiplier (or financial leverage) = 0.134 x 0.82 x 1.7 = 0.1868 = 18.68%
Rent expense in Volusia Company's 2016 income statement is $420,000. If Prepaid Rent was $70,000 at December 31, 2015, and is $95,000 at December 31, 2016, the cash paid for rent during 2016 is:_________
Answer:
$445,000
Explanation:
The rent in Volusian company income statement for 2016 is $420,000
The prepaid rent is $70,000 at December 31 2015 and $95,000 at December 31 2016
Therefore the cash paid for rent in 2016 can be calculated as follows
= $420,000+($95,000-$70,000)
= $420,000 + $25,000
= $445,000
estimated cost: a. managers use to make decisions about the future b. find a right price c. is not useful for
Answer:
managers use to make decisions about the future
Explanation:
Estimated cost is the cost that is projected to be incurred by a business when undertaking a project, program, or operation.
It comprises of the list of expenses that will be spent on an activity in the future.
Therefore it is used by managers to decide on the best activity to undertake in the future.
Usually the activity that has the lowest cost is balanced against the required quality.
In an appearance on Shark Tank, the owner of a wedding runner company wanted to pursue a strategy of _____ and make her runners affordable to the public. The sharks suggested she should pursue a strategy of ______, focusing on quality and uniqueness.a. differentiation; cost leadershipb. unrelated diversification; related diversificationc. cost leadership; differentiationd. focused retrenchment; growthe. related diversification; unrelated diversification
Answer:
c. cost leadership; differentiation
Explanation:
Remember, we are told that the owner wants to make her runners affordable to the public, and we agree that affordability is only possible when there is cost leadership. Cost leadership strategy simply implies that the company's products/services are positioned to be the cheapest in comparison with other competitors.
To specifically focus on quality and uniqueness, the sharks were asking the owner to pursue the differentiation strategy. Differentiation strategy requires having features that set your product or service apart from others such as quality and uniqueness.
Last year there was no change in either the raw materials or the work in process beginning and ending inventories. However, finished goods, which had a beginning balance of $25,000, increased by $15,000. If the manufacturing costs incurred totaled $600,000 during the year, the cost of goods available for sale must have been:_______.
a. $585,000
b. $600,000
c. $610,000
d. $625,000
Answer:
d. $625,000
Explanation:
cost of goods available for sale = cost of goods manufactured during the current period + finished goods inventory at the beginning of the period
cost of goods manufactured during the current period = $600,000finished goods inventory at the beginning of the period = $25,000cost of goods available for sale = $600,000 + $25,000 = $625,000
cost of goods sold = cost of goods available for sale - ending inventory = $625,000 - $40,000 = $585,000