Answer:
The federal fund rate will increase, non borrowed reserves will decrease and no change in borrowed reserves.
Explanation:
Federal fund rate is an interest rate which banks pay off each night on depository funds. This rate can be above the discount rate because banks prefer to pay higher market rate than to borrow from Fed. When the fed raises target federal fund than federal fund rate will increase causing a decline in no borrowed reserves.
he Dimitrios Company records the following transactions during September 2018: Cash sales to customers totaling $5,800. Sales to customers on credit cards totaling $18,800. The average credit card fee is 3.0%. The company collects all cash due from the credit card companies. A $2,000 sale on account to a long-time customer with terms of 2/10, n/30. The sale is made on September 5. The customer pays the invoice on September 14. A customer returns product they had purchased last month for $500. Dimitrios accepts the return and gives the customer a cash refund. Calculate the following amounts: Service charge expense for credit card sales Sales discount (contra-revenue) for sales on account Sales returns (contra-revenue) Gross sales revenue Net sales revenue Net cash collected from sales
Answer:
The Dimitrios Company
Service charge expense for credit card sales = $564 ($18,800 * 3%)
Sales discount (contra-revenue) for sales on account = $40 ($2,000 * 2%)
Sales returns (contra-revenue) - $500
Gross sales revenue:
Cash $5,800
Cards $18,800
Accounts receivable $2,000
Total = $26,600
Net sales revenue = $26,100 ($26,600 - $500)
Net cash collected from sales:
Cash Sales $5,800
Card Sales $18,800
Accounts Receivable $2,000
Less: Card Fees $564
Cash Discounts $40
Cash Refund $500
Net cash = $ 25,496
Explanation:
a) Data and Analysis:
Sept. 2018:
Cash $5,800 Sales Revenue $5,800
Credit Cards Receivable $18,800 Sales Revenue $18,800
Credit Card Fee Expense $ 564 Cash $564
Cash $18,800 Credit Cards Receivable $18,800
Accounts Receivable $2,000 Sales Revenue $2,000, terms of 2/10, n/30.
Cash $1,960 Cash Discounts $40 Accounts Receivable $2,000
Sales Returns $500 Cash $500
Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 40,000 for January, 60,000 for February, and 50,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows. Commissions 10 % of sales dollars Rent $ 17,000 per month Advertising 11 % of sales dollars Office salaries $ 74,000 per month Depreciation $ 55,000 per month Interest 13 % annually on a $210,000 note payable Tax rate 40 % Prepare a budgeted income statement for this first quarter. (Round your final answers to the nearest whole dollar.)
Answer:
Fortune, Inc.
Budgeted Income Statement for the first quarter ended March 31
Sales revenue $3,750,000
Cost of goods sold 1,800,000
Gross profit $1,950,000
Expenses:
Commission 375,000
Advertising 412,500
Office salaries 222,000
Depreciation 165,000
Interest expense 10,075
Total expenses $1,184,575
Net income $765,425
Explanation:
a) Data and Calculations:
Selling price per unit = $25
Forecast sales units:
January 40,000
February 60,000
March 50,000
Total sales for the quarter = 150,000 units
Sales revenue = $3,750,000 (150,000 * $25)
Cost of goods sold = $12 per unit
Cost of goods sold = $1,800,000 (150,000 * $12)
Commission = 10% of sales dollars
Commission = $375,000 ($3,750,000 * 10%)
Rent = $17,000 per month (Total for quarter = $51,000)
Advertising = 11% of sales dollars
Advertising = $412,500 ($3,750,000 * 11%)
Office salaries = $74,000 per month (Total for quarter = $222,000)
Depreciation = $55,000 per month (Total for quarter = $165,000
Interest expense = 13% of $310,000 annually
Interest expense for the quarter = $10,075 ($310,000 * 13% * 1/4)
Two years ago, Kimberly became a 30 percent partner in the KST Partnership with a contribution of investment land with a $10,000 basis and a $16,000 fair market value. On January 2 of this year, Kimberly has a $15,000 basis in her partnership interest, and none of her pre-contribution gain has been recognized. On January 2 Kimberly receives an operating distribution of a tract of land (not the contributed land) with a $12,000 basis and an $18,000 fair market value.
a. What is Kimberly’s remaining basis in KST after the distribution?
b. What is KST’s basis in the land Kimberly contributed after Kimberly receives this distribution?
Answer:
A. $6,000
B. $13,000
Explanation:
A. Calculation to determine Kimberly’s remaining basis in KST after the distribution
Basis in KST$ 15,000
Add §737 gain $3,000
($15,000-$12,000)
Deduct Carryover basis in land ($12,000)
Remaining basis in KST $6,000
($15,000+$3,000-$12,000).
Therefore Kimberly’s remaining basis in KST after the distribution will be $6,000
B. Calculation to determine KST’s basis in the land Kimberly contributed after Kimberly receives this distribution
KST basis upon contribution $10,000
Add Kimberly’s §737 gain $3,000
($15,000-$12,000)
KST’s basis in land $13,000
($10,000+$3,000)
Therefore KST’s basis in the land Kimberly contributed after Kimberly receives this distribution is $13,000
We have implicitly assumed that Ace Airline starts paying the salary of $15,000 per month only at the end of the two-month school. Such a practice drew significant complaints from the trainees. Ace decided to change its practice and pay the trainees during the training session as well. How would the new policy change Ace's class size
Answer:
Ace Airline class size will increase as more trainees would be willing to work with Ace Airlines.
Explanation:
Ace airlines is paying trainees $15,000 per month after they complete their training. There was a complain by trainees that they are not paid for the training and the training expense is born by the trainees themselves. Ace decides to pay the trainees for the training sessions as well and this will attract more trainees to work for Ace.
11) Domergue Corp. currently has an EPS of $3.76, and the benchmark PE for the company is 21. Earnings are expected to grow at 5.1 percent per year. (4 pts.) a) What is your estimate of the current stock price? b) What is the target stock price in one year? c) Assuming the company pays no dividends, what is the implied return on the company’s stock over the next year?
Answer:
(a) 78.96
(b) 82.99
(c) 5.10
Explanation:
The current stock price can be calculated as follows
= 3.76 × 21
= 78.96
The target stock price in one year can be calculated as follows
= 3.76(1+5.1%)×21
= 3.76×(1+0.051)×21
= 3.76×1.051×21
= 82.99
The implied return on company's stock over one year can be calculated as follows
= 82.99-78.96/78.96
= 4.03/78.96
= 0.0510× 100
= 5.10
You have your choice of two investment accounts. Investment A is a 6-year annuity that features end-of-month $1,980 payments and has an interest rate of 7 percent compounded monthly. Investment B is an annually compounded lump-sum investment with an interest rate of 9 percent, also good for 6 years.
How much money would you need to invest in B today for it to be worth as much as Investment A 6 years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
$112,166
Explanation:
the future value of Investment A:
payment = $1,980
n = 6 x 12 = 72
i = 9% / 12 = 0.75%
FVIFA = [(1 + i)ⁿ- 1 ] / i = [(1 + 0.0075)⁷² - 1 ] / 0.0075 = 95.007
future value = $1,980 x 95.007 = $188,114
now we need to determine the PV of investment B:
PV = $188,114 / (1 + 9%)⁶ = $112,166
Answer: $105,264.24
Explanation:
Step 1) Calculate Future Value of Investment A
Rate: .07/12 = .58%
Payment: $1,980
Term: 72 (6 years * 12 months)
Future Value: ?
In excel -> FV(.58,72,-1980,0)
Future Value = $176,538.67
Step 2) Calculate Present Value of Investment B using Investment A Future Value
Rate: .09
Payment: $0
Term: 6
Future Value: $176,538.67 (from step 1)
PV(.09,6,0,-176538.67)
Present Value = $105,264.24
Thats your answer!! ^^^^^
You can also use the formula or calculator, but I've found excel is the easiest/fastest.
Cheers!
What is the difference between social marketing and advertising?
Answer:
Social media marketing is any social media action you take that is unpaid. If you're posting about your blogs, sharing info with your followers, or commenting in social media groups, you're marketing. Social media advertising is any action you take on social media that is paid.
Explanation:
In its first year of operations, Crane Company recognized $31,700 in service revenue, $7,700 of which was on account and still outstanding at year-end. The remaining $24,000 was received in cash from customers. The company incurred operating expenses of $16,600. Of these expenses, $12,690 were paid in cash; $3,910 was still owed on account at year-end. In addition, Crane prepaid $3,260 for insurance coverage that would not be used until the second year of operations.
Required:
Calcuate the first year's net earnings under the cash basis of accounting, and calculate the first years net earnings under the accrual basis of accouriting.
Answer:
Under the cash basis, expenses and revenue are recorded in the period the cash is received or spent.
Under the Accrual basis, expenses and revenue are recorded in the period incurred.
Under Cash basis:
= Cash Revenue - cash expenses - Prepaid expenses
= 24,000 - 12,690 - 3,260
= $8,050
Under Accrual basis:
= Revenue for the year - Expenses for the year
= 31,700 - 16,600
= $15,700
A small factory is considering replacing its existing coining press with a newer, more efficient one. The existing press was purchased three years ago at a cost of $200000, and it is being depreciated according to a 7-year MACRS depreciation schedule. The factoryâs CFO estimates that the existing press has 6 years of useful life remaining. The purchase price for the new press is $280000. The installation of the new press would cost an additional $20000, and this installation cost would be added to the depreciable base. The new press (if purchased) would be depreciated using the 7-year MACRS depreciation schedule although, as noted below, it would be retired/sold after 6 years. Interest expenses associated with the purchase of the new press are estimated to be roughly $4000 per year for the next 6 years.
The appeal of the new press is that it is estimated to produce a pre-tax operating cost savings of $81000 per year for the next 6 years. Also, if the new press is purchased, the old press can be sold for $30000 today. The CFO believes that the new press would be sold for $45000 at the end of its 6-year useful life. Assume that NWC would not be affected. The company has an average tax rate of 29% and a marginal tax rate of 34%. The cost of capital (i.e., the discount rate) for this project is 8.5%.
Required:
Develop the incremental cash flows for this replacement decision and use them to calculate NPV and IRR. Next, make a conclusion about whether or not the existing coining press should be replaced at this time.
Answer:
1. Incremental Cash Flows:
Cash Flows Total PV of annual
Cash Flows
After-tax operating savings $57,510 $261,877
Sale proceeds from old press 30,000 30,000
Sale proceeds from new press 45,000 27,583
Total incremental cash inflows $132,510 $319,460
Cost of new press $280,000 $280,000
Installation cost of new press 20,000 20,000
Interest expense (associated) 4,000 18,214
Total incremental cash outflows $340,000 $318,214
2. NPV $1,246 ($319,460 -$318,214)
IRR = the cost of capital that will cause the NPV to be zero. Since it is $1,246, to find the rate, that makes it zero, we do the following calculations:
$1,246/$318,214 * 100 = 0.4%
Cost of capital = 8.5%
3. IRR = 8.5 - 0.4 = 8.1%
4. Conclusion: The existing press should be replaced at this time.
Explanation:
a) Data and Calculations:
Cost of old press = $200,000
Estimated useful life remaining = 6 years
Cost of new press = $280,000
Installation cost = $20,000
Total cost of new press $300,000
Interest expenses per year for the new press = $4,000
Cost Savings from new press:
Pre-tax operating cost savings = $81,000 per year
After-tax savings = $57,510 ($81,000 * (1 - 29%))
Sales proceeds from old press = $30,000 today
Sale proceeds from new press = $45,000 (at the end of its 6-year life)
Average tax rate = 29%
Marginal tax rate = 34%
Cost of capital = 8.5%
Each service starts on a different date because the services depend on each other. Enter the starting dates for the remaining services as follows:
a. In cell D6, enter a formula without using a function that adds 4 days to the value in cell 06.
b. In cell E6, enter a formula without using a function that subtracts 3 days from the value in cell C6
c. In cell F6, enter a formula without using a function that adds 2 days to the value in cell E6
d. In cell G6, enter a formula without using a function that adds 2 days to the value in cell C6.
Answer:
a. Copy the range of cell D7:D9 then select cell D6 and paste the selection with date format selected. The function will be represented in formula bar with adding +4;365 days.
b. Copy the range of cell D7:D9 then select cell D6 and paste the selection with date format selected. The function will be represented in formula bar with adding -3;365 days.
c. In the formula bar type =365 days; +2 : E6
d. In the formula bar type =365 days ; +2 : C6
Explanation:
Excel is a software which helps the users to easily calculate complex calculation with just one function input. The users can create worksheets using the excel and then link those worksheets with each other. The data can be displayed in the form of table or simple text. It has multiple options to create annual day wise filtered worksheets.
What do we call the value of the next best alternative given up when a choice is made?
A opportunity cost
B sunk cost
C needs
D scarcity
Answer:
A) Opportunity Cost
Explanation:
Short Company purchased land by paying $11,000 cash on the purchase date and agreed to pay $11,000 for each of the next six years beginning one-year from the purchase date. Short's incremental borrowing rate is 7%. On the balance sheet as of the purchase date, after the initial $11,000 payment was made, the liability reported is closest to: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided.)
Answer: $52,431.50
Explanation:
The liability reported will be the present value of the six payments of $11,000.
Since this is a constant amount, it will be an annuity:
= 11,000 * Present value interest factor of an annuity, 6 years, 7%
= 11,000 * 4.7665
= $52,431.50
Any difference between this and any options given is down to rounding errors. Pick the closest figure.
The customer-service department at Park-E Bank complains it is unable to keep track of its new business clients as the department handling data compilation has failed to enable a free exchange of information between the two departments. This has hindered the customer-service department to follow up on its customers' queries and update their relationship status with the bank. This has also impacted the department's sales target. This scenario exemplifies conflict due to
Answer:
task interdependence
Explanation:
Task interdependence is a form of conflict that occurs when there is more than one department needed to complete a task, and when one of them fails, consequently the other is affected and the task is not completed effectively. This is the case of Park-E Bank, which complains that it is unable to keep up with its new commercial customers, as the department that deals with the compilation of data has failed to allow the free exchange of information between the two departments.
The interdependence of tasks is a conflict that affects organizational activities as a whole, and can bring essential problems for the correct flow of business, it is necessary then that there is a correct management, control and coordination of tasks to reduce the bottlenecks found in organizational processes and improve continuous improvement that is beneficial for all organizational systems to operate correctly.
1 points Time Remaining 1 hour 14 minutes 35 seconds01:14:35 eBookPrintReferencesCheck my workCheck My Work button is now enabledItem 13 Time Remaining 1 hour 14 minutes 35 seconds01:14:35 Alice is single and self-employed in 2020. Her net business profit on her Schedule C for the year is $196,000. What is her self-employment tax liability and additional Medicare tax liability for 2020
Answer:
Self employment tax liability = $22,323.97Additional Medicare tax liability = $0Explanation:
According to the IRS, the amount subject to self-employment tax is 92.35% of net income from self-employment for the year.
Alice's taxable income is:
= 92.35% * 196,000
= $181,006
Self employment tax-liability:
Social security tax for 2020 is 12.4% for the first $137,700 of income.
= 12.4% * 137,700
= $17,074.80
Medicare tax:
= 2.9% on taxable income
= 2.9% * 181,006
= $5,249.17
Self-employment tax is:
= 17,074.80 + 5,249.17
= $22,323.97
Additional Medicare tax applies on only amounts above $200,000 so it is $0 in this case.
The carrying value of bonds at maturity always equals: Multiple Choice the amount of discount or premium. the amount of cash originally received in exchange for the bonds plus any unamortized discount or less any premium. the par value of the bond. the amount of cash originally received in exchange for the bonds. the amount in excess of par value.
Answer: the par value of the bond
Explanation:
The carrying value of bonds at maturity will always be equal to the par value of the bond. The carrying value of a bond is simply refered to as the bond's face value or par value plus the premiums taht are unamortized.
We should note that during the time of maturity of the bond, there'll have been an ammortization of the discounts or premiums, while the bond's par value will be left.
The carrying value of bonds at maturity always equals to the amount of cash originally received in exchange for the bonds plus any unamortized discount or less any premium. Thus, option (b) is correct.
At maturity, bonds' carrying values will always be the same as their par values. The face value or par value of a bond plus any unamortized premiums are simply referred to as the bond's carrying value.
To put it another way, it is the total of a bond's face value, any unamortized premiums, and any unamortized discounts, if any. The par value, interest rate, and remaining maturity period of the bond must all be known before calculating the carrying value using the effective interest rate technique.
Therefore, option (b) is correct.
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Patterson and Clay Companies both use cost-plus pricing formulas and arrived at a selling price of $1,000 for the same product. Patterson uses absorption manufacturing cost as the basis for computing its dollar markup whereas Clay uses total cost. Which of the following choices correctly denotes the company that would have (1) the higher cost basis for deriving its dollar markup and (2) the higher markup percentage?
Cost Basis Patterson Patterson Clay Clay More information is needed to judge Markup Percentage Patterson Clay Patterson Clay More information is needed to judge
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
Answer:
Patterson and Clay Companies
1. Higher cost basis for marking up is:
= Clay Company
2. Higher markup percentage is:
= Patterson Company
Explanation:
a) Data and Analysis:
Costing formulas:
Patterson:
Absorption manufacturing cost
Markup = Higher markup rate
Selling price $1,000
Clay:
Total cost = Higher cost basis for marking up
Markup
Selling price $1,000
b) Total cost is higher than total manufacturing costs. It includes more than the total manufacturing costs. Absorption manufacturing costs only include the variable manufacturing costs and fixed manufacturing overhead costs. Total costs include all the absorption costs and other selling, administrative, and distribution costs.
Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2021. International Machines manufactured the equipment at a cost of $94,000. Manufacturers Southern's fiscal year ends December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term 2 years (8 quarterly periods) Quarterly rental payments $18,200 at the beginning of each period Economic life of asset 2 years Fair value of asset $138,287 Implicit interest rate 6% Required: 1. Show how International Machines determined the $18,200 quarterly lease payments. 2. Prepare appropriate entries for International Machines to record the lease at its beginning, January 1, 2021, and the second lease payment on April 1, 2021.
Answer:
1. $18,200 per quarter
2. 1-Jan-21
Dr Lease Receivable $138,287
Dr Cost of Goods Sold $94, 000
Cr Inventory of Equipment $94,000
Cr Sales Revenue $138,287
Dr Cash $18,200
Cr Lease Receivable $18,200
1-Apr-21
Dr Cash $18,200
Cr Lease Revenue $1,801
Cr Lease Receivable $16,399
Explanation:
1. Calculation to Show how International Machines determined the $18,200 quarterly lease payments
First step is to find the Present value of annuity at period start
Lease term=n = 2 x 4 quarters
Lease term=n= 8 periods
Fair value of asset = $138,287
Implicit interest rate, i = 6%, quarterly rate = 6%/4 Implicit interest rate= 1.5%
Present value of annuity at period start at 1.5%, 8 periods
Present value of annuity at period start = 7.5982
Now let determine the quarterly payments
Quarterly payments= $138,287/7.5982
Quarterly payments = $18,200 per quarter
Therefore the quarterly lease payments is $18,200
2) Preparation of the appropriate entries for International Machines to record the lease at its beginning, January 1, 2021, and the second lease payment on April 1, 2021.
1-Jan-21
Dr Lease Receivable $138,287
Dr Cost of Goods Sold $94, 000
Cr Inventory of Equipment $94,000
Cr Sales Revenue $138,287
(To record lease at its beginning)
Dr Cash $18,200
Cr Lease Receivable $18,200
(To record lease at its beginning)
1-Apr-21
Dr Cash $18,200
Cr Lease Revenue $1,801
Cr Lease Receivable $16,399
(To record second lease payment)
Calculation of lease revenue as on April 1, 2021
Lease revenue = ($138,287 – $18,200) x 1.5%
Lease revenue= $120,087×1.5%
Lease revenue= $1,801
Lease receivable = $18,200 – $1,801
Lease receivable = $16,399
Expenses recognition Sun Microsystems uses the accrual basis of accounting and recognizes revenue at the Lime it sells goods or renders services. It applies U.S. GAAP and reports in U.S. dollars. Indicate the amount of expenses (if any) the firm recognizes during the months of June. July, and August in each of the following hypothetical transactions. The firm does the following:
a. Pays $180,000 on July 1 for one year’s rent on a warehouse beginning on that date.
b. Receives a utility bill on July 2 totaling $4,560 for services received during June. It pays the utility bill during July.
c. Purchases office supplies on account costing $12,600 during July. It pays $5,500 for these purchases during July and the remainder during August. Office supplies on hand on July 1 cost $2,400, on July 31 cost $9,200, and On August 31 cost $2,900.
d. Pays $7,200 on July 15 for property taxes on office facilities for the current calendar year.
e. Pays $2,000 on July 15 as a deposit on a custom-made delivery van that the manufacturer will deliver on September 30.
f. Pays $4,500 on July 25 as an advance on the August salary of an employee.
g. Pays $6,600 on July 25 for advertisements that appeared in computer journals during June.
Answer:
Sun Microsystems
Amount of Expenses to recognize during the months of June, July, and August in each of the following transactions:
a. Rent Expense = $30,000
b. Utility Expense = $4,650
c. Supplies Expense = $9,700
d. Property Taxes = $1,800
e. No expense is recognized.
f. Salary Expense = $4,500
g. Advertising Expense = $6,600
Explanation:
Data and Calculations:
a. Rent Expense = $180,000/12 * 2 = $30,000 Rent Prepaid $150,000
b. Utility Expense $4,560
c. Supplies Expense $9,700 ($12,600 - $2,900)
d. Property Taxes = $7,200 *3/12 = $1,800
e. No expense is recognized for the advance payment for delivery van.
f. Salary Expense $4,500
g. Advertising Expense $6,600
Patterson Development sometimes sells property on an installment basis. In those cases, Patterson reports income in its income statement in the year of the sale but reports installment income by the installment method on the tax return. Installment income in 2021 was $240 million, which Patterson expects to collect equally over the next four years. The tax rate is 25%, but based on an enacted law, is scheduled to become 35% in 2023.
Patterson's pretax accounting income for the 2013 income statement was $530 million of this, $30 million is non-taxable revenue from proceeds of a life insurance policy. There were no differences between accounting income and taxable income other than those described above and no cumlative temporary differences existed at the beggining of the year:
1. Prepare the appropriate journal entry to record patterson's 2013 income taxes.
2. What is Patterson's 2013 net income?
Answer:
1. Debit Income tax expense for $143 million; Credit Deferred tax liability for $78 million; and Credit Income tax payable for $65 million.
2. Patterson's 2021 net income is $387.
Explanation:
Note: There is an error in the question because of date inconsistency. Therefore, 2021 upward is used in the answer to ensure date consistency.
1. Prepare the appropriate journal entry to record patterson's 2021 income taxes.
Note: See the attached excel file for the calculation of income tax payable and deferred tax liability.
The journal entry will look as follows:
Date General journal Debit ($'M) Credit ($'M)
31 Dec 2021 Income tax expense 143
Deferred tax liability 78
Income tax payable 65
(To record income tax payable.)
2. What is Patterson's 2021 net income?
This can be determined as follows:
Particulars ($'Million)
Pre accounting income 530
Income tax expense (143)
Net income 387
View Policies Current Attempt in Progress Ivanhoe, Inc. had pre-tax accounting income of $1700000 and a tax rate of 20% in 2021, its first year of operations. During 2021 the company had the following transactions:
Received rent from Jane, Co. for 2022 $86000
Municipal bond income $110000
Depreciation for tax purposes in excess of book depreciation $50000
Installment sales profit to be taxed in 2022 $152000
At the end of 2021, which of the following deferred tax accounts and balances exist at December 31, 2021
a) $419,400
b) $471,600
c) $594,000
d) $504,900
Answer:
$17,200
Explanation:
Calculation to determine deferred tax accounts and balances exist at December 31, 2021
Using this formula
Deferred tax accounts=Rent Received* Tax rate
Let plug in the formula
Deferred tax accounts=$86000* 20
Deferred tax accounts=$17,200 Deferred tax asset
Therefore the deferred tax accounts and balances exist at December 31, 2021 will be $17,200
f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic sold equipment (that originally cost $170,000 but had a $84,000 book value on that date) to Placid Lake for $118,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2021, consolidation of these two companies to eliminate the impact of the intra-entity transfer
Answer:
Journal 1
Debit : Other Income $34,000
Credit : Equipment $34,000
Journal 2
Debit : Accumulated depreciation $6,800
Credit : depreciation $6,800
Explanation:
Step 1 : Eliminate the Income resulting from sale and the additional value of equipment sitting in the buyer books
Income = Selling Price - Carrying Amount
where,
Carrying Amount = Cost - Accumulated depreciation
= $84,000
therefore,
Income = $118,000 - $84,000 = $34,000
Journal;
Debit : Other Income $34,000
Credit : Equipment $34,000
Step 2 : Eliminate the unrealized profit as a result of additional asset value
unrealized profit = income ÷ remaining useful life
= $34,000 ÷ 5
= $6,800
Journal;
Debit : Accumulated depreciation $6,800
Credit : depreciation $6,800
JOURNALIZING SALES TRANSACTIONS. Enter the following transactions in a sales journal. Use a 6% sales tax rate.
May 1 Sold merchandise on account to J. Adams, $2,000, plus sales tax. Sale No. 488.
4 Sold merchandise on account to B. Clark, $1,800, plus sales tax. Sale No. 489.
8 Sold merchandise on account to A. Duck, $1,500, plus sales tax. Sale No. 490.
11 Sold merchandise on account to E. Hill, $1,950, plus sales tax. Sale No. 491.
Answer:
May 1
Dr Accounts Receivable- J. Adams2120
Cr Sales $2,000
Sales Tax Payable 120
May 4
Dr Accounts Receivable- B. Clark 1908
Cr Sales 1800
Cr Sales Tax Payable 108
May 8
Dr Accounts Receivable- A. Duck 1590
Cr Sales 1500
Cr Sales Tax Payable 90
May 11
Dr Accounts Receivable- E. Hill 2067
Cr Sales 1950
Cr Sales Tax Payable 117
Explanation:
Preparation of sales journal entries
May 1
Dr Accounts Receivable- J. Adams2120
(2,000+120)
Cr Sales $2,000 Sales Tax Payable 120
($2,000*6%)
May 4
Dr Accounts Receivable- B. Clark 1908
(1800+108)
Cr Sales 1800
Cr Sales Tax Payable 108
(1800*6%)
May 8
Dr Accounts Receivable- A. Duck 1590
(1500+90)
Cr Sales 1500
Cr Sales Tax Payable 90
(1500*6%)
May 11
Dr Accounts Receivable- E. Hill 2067
(1950+117)
Cr Sales 1950
Cr Sales Tax Payable 117
(1950*6%)
Old Economy Traders opened an account to short-sell 1,300 shares of Internet Dreams at $46 per share. The initial margin requirement was 50%. (The margin account pays no interest.) A year later, the price of Internet Dreams has risen from $46 to $59, and the stock has paid a dividend of $3.50 per share. a. What is the remaining margin in the account? (Round your answer to the nearest whole dollar.)
Answer: $8450
Explanation:
First, we need to calculate the total initial asset which will be the value of shares sold and the margin which will be:
= (1300 × $46) + (50% × 1300 × $46)
= $59800 + $29900
= $89700
We will then calculate total liability which will be:
= (1300 × $59) + (1300 × $3.50)
= $76700 + $4550
= $81250
The remaining margin will then be:
= $89700 - $81250
= $8450
Trainees are put through a two-month school. The fixed cost of running one session of this school is $150,000. Any number of sessions can be run during the year but must be scheduled so that the airline always has enough flight attendants. The cost of having excess attendants is simply the salary that they receive, which is $15,000 per month. How many sessions of the school
Answer:
The airline training school can run maximum of 10 sessions.
Explanation:
There can be 10 sessions which can be held at the training school. The airline school needs to have enough attendants so that they do not run a session in spare capacity. If a session is run with few attendants then it will cost $15,000 per session which is an additional cost burden for the airline training school.
Park Co.'s wholly-owned subsidiary, Schnell Corp., maintains its accounting records in German marks. Because all of Schnell's branch offices are in Switzerland, its functional currency is the Swiss franc. Remeasurement of Schnell's 20X1 financial statements resulted in a $7,600 gain, and translation of its financial statements resulted in an $8,100 gain. What amount should Park report as a foreign exchange gain in its income statement for the year ended December 31, 20X1
Answer: $7600
Explanation:
The amount that Park should report as a foreign exchange gain in its income statement for the year ended December 31, 20X1 will be $7600.
We should note that when we want to determine the net income for a particular period, the translatation adjustments will not be included. Therefore the $8100 gain won't be included in the calculation. Hence, Park should report only $7600 gain.
Suppose the economy is experiencing a recession. The output gap is hovering at −7%, causing higher than normal unemployment. Using the Fed model, complete the following passages to compare and contrast how monetary policy and fiscal policy can impact the economy. a. The Federal Reserve can reduce the to stimulate greater output and employment. The federal government can increase to help ease the recession. b. If both monetary and fiscal policy are used, the MP curve will shift , and the IS curve will shift to the . Both shifts will increase , and t
Answer:
a. The Federal Reserve can reduce the interest rates to stimulate greater output and employment. The federal government can increase government spending to help ease the recession.
The Fed can reduce interest rates by engaging in expansionary monetary policy that would then make it easier to borrow funds for investment. The Federal government can also increase spending as this will put more money into the economy to help it start moving again.
b. If both monetary and fiscal policy are used, the MP curve will shift downward, and the IS curve will shift to the right. Both shifts will increase income.
If both monetary and fiscal policy are used, companies will start producing again and hiring more people which will shift the Marginal Productivity curve downward. The IS curve will also shift to the right and both to these are indicators of an increase in income.
Scoring: Your score will be based on the number of correct matches. There is no penalty for incorrect or missing matches.
Match each of the following transactions to the journal in which it would be entered.
Clear All
Revenue journal Cash receipts journal Purchases journal Cash payments journal General journal Recognized depreciation on the building Journalized the adjusting entry for supplies used during the period Closed the revenue account at the end of the period Received cash from the bank in exchange for a note payable Withdrew cash for personal use (by owner)
Answer:
Matching transactions to the journal in which they would be entered:
Transactions Journal Type
1. Recognized depreciation on the building General Journal
2. Journalized the adjusting entry for supplies
used during the period General Journal
3. Closed the revenue account at the end
of the period General Journal
4. Received cash from the bank in exchange
for a note payable Cash Receipts Journal
5. Withdrew cash for personal use (by owner) Cash Payments Journal
Explanation:
Revenue journal records revenue transactions.
Cash receipts journal records all cash receipts.
Purchases journal records all purchases on account.
Cash payments journal records all cash payments.
General journal is used for all transactions, especially those that cannot be recorded in any of the other specialized journals.
The following are budgeted data: January February March Sales in units 16,900 23,800 19,900 Production in units 19,900 20,900 20,000 One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 25% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:
Answer:
Purchases= 20,675 pounds
Explanation:
Giving the following information:
Production:
Feb= 20,900
Mar= 20,000
One pound of material is required for each finished unit.
Desired ending inventory= 25% of the following month's production needs.
To calculate the purchase required for February, we need to use the following formula:
Purchases= production + desired ending inventory - beginning inventory
Purchases= 20,900 + (20,000*0.25) - (20,900*0.25)
Purchases= 20,675
At the beginning of 2020, Beerbo acquired a mine for $970,000. Of this amount, $100,000 was ascribed to the land value (the remaining portion was ascribed to the mine). Surveys conducted by geologists have indicated that approximately 12,000,000 units of ore appear to be in the mine. Beerbo incurred $170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use (when all of the minerals have been removed) is $40,000. During 2020, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. What is the amount extracted in 2020
Answer:
$225,000
Explanation:
Depletion rate = [Mine cost - Land value + Obligation to prepare the land for an alternative + Development cost] / Total number of ore extracted
Depletion rate = [$970,000 - $100,000 + $40,000 + $170,000] / $12,000,000
Depletion rate = $1,080,000/$12,000,000
Depletion rate = $0.09
Amount extracted in 2020 = Unit of ore extracted in 2020 / Depletion rate
Amount extracted in 2020 = 2,500,000 units * $0.09
Amount extracted in 2020 = $225,000
Current Attempt in Progress
Cullumber Company entered into these transactions during May 2022, its first month of operations.
1. Stockholders invested $42,500 in the business in exchange for common stock of the company.
2. Purchased computers for office use for $31,900 from Ladd on account.
3. Paid $2,900 cash for May rent on storage space.
4. Performed computer services worth $17,900 on account.
5. Performed computer services for Wharton Construction Company for $5,400 cash.
6. Paid Western States Power Co. $8,300 cash for energy usage in May.
7. Paid Ladd for the computers purchased in (2).
8. Incurred advertising expense for May of $1,600 on account.
9. Received $14,000 cash from customers for contracts billed in (4).
Create a tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders' Equity in the far right column. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)
Answer:
Assets = Liabilities + Stockholders' Equity = $68,600
Explanation:
Note: See the attached excel file for the tabular analysis of the effect of each transaction on the accounting equation.
From the attached excel file, we have:
Assetes = Total assets balance = = $18,800 + $17,900 + 31,900 = $68,600
Liabilities = Total liabilities balance = $1,600
Stockholders' Equity = Total Common Stock balance + Total Net Income balance = $42,500 + $25,500 = $67,000
Liabilities + Stockholders' Equity = $1,600 + $67,000 = $68,600
Therefore, we have:
Assets = Liabilities + Stockholders' Equity = $68,600