Answer:
(a) $406,873
(b) $242,627
Explanation:
Given that,
Purchases = $440,600;
Purchase Returns and Allowances = $11,980;
Purchase Discounts = $8,247; and
Freight-in = $16,900.
Beginning inventory = $57,710,
Ending inventory = $88,110
Net sales = $649,500
Cost of goods sold:
= Beginning inventory + Purchases + Freight-in - Purchase Returns and Allowances - Purchase Discounts - Ending inventory
= $57,710 + $440,600 + $16,900 - $11,980 - $8,247 - $88,110
= $406,873
Gross profit:
= Net sales - Cost of goods sold
= $649,500 - $406,873
= $242,627
Describe the difference between period costs and product costs.
(Period /Product costs) are operating costs that are expensed in the accounting period in which they are incurred.
(Period/Product costs) are all costs of a product that GAAP requires companies to treat as an asset for extemal financial reporting. These costs are recorded as an asset (inventory) on the balance sheet until the asset is sold. The cost is then transferred to an expense account, ??.
On the income statement, ?? is subtracted from ?? to determine gross proft. The ?? are then subtracted to determine operating income.
Classify Lawlor's costs as period costs or product costs.
If the costs are product costs, further classify as direct materials, direct labor or manufacturing overhead.
Shaft and handle of weed trimmer
Motor of weed trimmer
Factory labor for workers assembling weed trimmers
Nylon thread used by the weed trimmer (not traced to the product)
Glue to hold housing together
Plant janitorial wages
Depreciation on factory equipment
Rent on plant
Sales commissions
Administrative salaries
Plant utilities
Shipping costs to deliver finished weed trimmers to customers
Explanation:
The period cost is the cost that is incurred with the passage of time. It mainly involves the major portion of the selling and administration expenses like - selling expenses, advertising expenses. It is a fixed cost
While the product cost involves the cost related to the product. It involves direct material cost, direct labor cost, and the manufacturing overhead cost. It is a variable cost
So, the period cost is the operating cost that are expenses when it is incurred
Whereas the product cost is treat as an asset for external financial reporting. First this is recorded as an asset on the balance sheet until asset is sold and then it is transferred to the cost of goods sold i.e expense account
Now on the income statement the product cost or cost of goods sold is subtracted from the sales revenue so that the gross profit could come
Then the period cost is deducted to find out the operating income
Now the classification of the product cost and the period cost are as follows
Shaft and handle of weed trimmer = Direct material cost
Motor of weed trimmer = Direct material cost
Factory labor for workers assembling weed trimmers = Direct labor cost
Nylon thread used by the weed trimmer (not traced to the product) = Manufacturing overhead cost
Glue to hold housing together = Manufacturing overhead cost
Plant janitorial wages = Manufacturing overhead cost
Depreciation on factory equipment = Manufacturing overhead cost
Rent on plant = Manufacturing overhead cost
Sales commissions = Period cost
Administrative salaries = Period cost
Plant utilities = Manufacturing overhead cost
Shipping costs to deliver finished weed trimmers to customers = Period cost
After rollercoaster years of success and decline, Apple has found itself once again on top of its game. However, rivals like Microsoft and Google are pushing competitiveness. In fact, many of Apple’s rivals have the same or similar product offerings. Apple has hired you as a futurist. Help the company continue to diversify its products and maintain strategic competitiveness through new innovations and improved technologies. Through which strategy should Apple pursue its next big hit.a. Unrelated Diversification
b. Related Diversification
Answer:
The correct answer is letter "B": Related Diversification.
Explanation:
Related Diversification refers to the expansion in product lines of a company investing in the manufacturing of new goods that are related to the lines already being offered. Firms do this to attract new customers without losing their specialty. This opposes Unrelated Diversification where companies venture into new business lines unrelated to the existing business.
In 2019, Whispering Winds Corp. had net sales of $973,000 and cost of goods sold of $570,900. Operating expenses were $220,300, and interest expense was $14,600. Whispering Winds prepares a multiple-step income statement. Compute Whispering Winds gross profit.
Answer:
Whispering Winds Gross profit is $402,100
Explanation:
Multi step income statement differentiate the the operating revenue and expenses from non operating revenue and expenses. It shows the gross profit, operating profit and net profit separately.
Whispering Winds Corp.
Income statement for the year 2019
Net sales $973,000
Less: Cost of goods sold $570,900
Gross Profit $402,100
Less:Operating expenses $220,300
Operating Profit $181,800
Less: Interest expense $14,600
Profit before Tax $167,200
Final answer:
The gross profit for Whispering Winds Corp. in 2019 is calculated by subtracting the cost of goods sold from the net sales, resulting in a gross profit of $402,100.
Explanation:
To calculate the gross profit for Whispering Winds Corp., you subtract the cost of goods sold from the net sales. In this case, the company had net sales of $973,000 and the cost of goods sold was $570,900. The formula to calculate gross profit is:
Gross Profit = Net Sales - Cost of Goods Sold
So, using the provided figures:
Gross Profit = $973,000 - $570,900
Gross Profit = $402,100
Therefore, the gross profit for Whispering Winds Corp. in 2019 was $402,100.
ABC Corporation just issued 10-year, $1,000 par value bonds, with a 9% coupon with interest paid annually. The current required rate of return (i.e., YTM) is 7.5%. The current price of the bonds is approximately:_______
Answer:
The current price of the bonds is $1,102.96
Explanation:
In arriving at the current price of the bonds, I discounted all future cash flows of the bonds into present value by multiplying the cash flows payable by the bond with relevant year discounting factor.
PV=FV/(1+r)^n
For detailed computation on the bonds current price find attached.
Which of the following are considered to be forms of 'bundled payments'? Select all that apply. Group of answer choices Pay-for-performance Capitation DRG's Reference Pricing Salary Per Diem Fee-for-service
Answer:
Capitation
Fee for service
Explanation:
Bundled payment provide a single payment to hospitals, doctor, physician, and other providers (for home care, lab, medical equipment, etc.) for a defined episode of care. It is described as "a middle channel" between fee-for-service reimbursement (that allows providers to be paid for each service they render to a patient) and Capitation (that allows for providers to be paid a "lump sum" per patient not regarding how many services the patient receives), given the risk is shared between payer and provider. Bundled payments was proposed in the health care reform debate of the United States as a strategy for reducing health care costs, especially during the Obama administration.
Answer: "FEE - FOR - SERVICE" is considered to be a form of bundle payment.
Explanation: Bundle payment is a means of using incentives to compensate workers for a job done. In it's simplest term, it means the different ways of paying wages and salaries.
Fee-for-service is a retrospective type of payment, where workers are paid directly from the employer, for doing their job. The employee get less payment when the cost price is high, and high payment when the cost price is low. The employer checks the performance and level of each employee and pays directly to them.
In businesses, ________ include the president and other top executives, such as the chief executive officer, chief financial officer, and chief operations officer, who have overall responsibility for an organization.
Answer:
The correct answer is letter "B": Top Managers.
Explanation:
Top Managers are the executives of every firm responsible for the decision-making of the operations of the corporation. They are the head of each department in the corporate structure that includes the Chief Executive Officer (CEO), Chief Operations Officer (COO), Chief Information Officer (CIO), and Chief Marketing Officer (CMO) to mention a few. These are also referred to as "C-level positions".
A competitive firm produces output y. Some of its output is defective and cannot be sold. That is, only a fraction θ E (0, 1) can be sold in the market at unit price p. Let the cost function be c(y), with (y) 0 and c"() >0. Suppose that with experience, the share of good output θ increases. Does the firm compensate for the increased yield by reducing production, or will it instead increase production?
Answer:
Attached is the solution hope it helps:
Decision Point:
Employee 2: Sam
You look at the second employee, Sam. His resume indicates that he is an experienced programmer and a stickler for detail, but is accustomed to being given clear direction on a project. Also, when he’s working on a project he is focused on that project and doesn’t want to be interrupted. Based on this information, what team responsibilities would Sam find difficult to perform?
Answer: Handling Sales Calls
Explanation: Sam would experience difficulty in handling sales calls. This is because of Sam's introverted personality, and it would make this task difficult for him to perform.
Also, Sam is someone who doesn't want to be interrupted whenever he's working on a project, this is in stark contrast with handling of sales calls, where an employee is constantly attending to calls from different customers.
The Appliance Depot realizes that many of its customers purchase several appliances at one time and may not have immediate cash to pay for the purchase. Therefore, The Appliance Depot offers credit services where customers can pay for their purchase over time. It entices customers to shop at its store by offering "no money down" or "interest-free" options. This relates to the ________ function of marketing.
Answer:
Financing
Explanation:
Financing refers to usage of money and funds to finance the marketing agencies and promotions, in addition to financing the movement of goods through different channels of distribution.
Retailers usually use credit schemes to induce customers such as, payment in installments with zero interest payments. Such schemes enhance sales and also build consumer trust.
In the given case, Appliance Depot offers credit services whereby customers are granted convenient payment terms such as no down payment and interest free installments. This represents the marketing function of financing wherein the retailer facilitates financing customer's purchase via such credit schemes.
The offering of 'no money down' or 'interest-free' options by The Appliance Depot is related to the financing function of marketing, which facilitates purchases through loans and payment terms, expanding consumer access to goods.
Explanation:The Appliance Depot's practice of offering “no money down” or “interest-free” payment options for customers to pay for their purchases over time is related to the financing function of marketing. This function involves providing various methods to assist customers in purchasing goods or services. Offering credit services, especially with enticing terms, serves as a strategy to make high-cost items more accessible to customers and can increase a merchant's sales by breaking down the overall transaction into two parts. The merchant firstly provides a loan on certain terms, making the purchase possible, and then the customer completes the purchase using the borrowed funds.
In the broader context of economics and business, the credit transaction is a fundamental part of consumer purchasing decisions, especially for large ticket items such as appliances. This concept of buying on credit has been a key component of the evolution of consumerism, allowing the expansion of the market for goods and services by making them more attainable for the public.
Red Bison Petroleum Producers Group is expected to generate $140,000,000 in net income over the next year. Red Bison Petroleum Producers Group has forecasted a capital budget of $86,000,000, and it wishes to maintain its current capital structure of 70% debt and 30% equity. t plans to spend $85,000,000 on capital projects over the next year and expects to finance this investment in the same proportion as its capital structure. the company makes distributions in the form of dividends.
What will Red Bison Petroleum Producers' dividend payout ratio be if it follows a residual dividend policy?
Answer:
Detailed solution is given below:
Red Bison expects to generate $140 million in net income and spend $25.8 million on capital projects. The expected dividend payout ratio is dividends paid ($114.2 million) divided by net income, which is 81.57%.
Calculating Red Bison Petroleum Producers' Dividend Payout Ratio
Red Bison Petroleum Producers Group plans to maintain a capital structure of 70% debt and 30% equity. According to a residual dividend policy, dividends are paid out from net income after all acceptable investment opportunities have been financed. The company expects to generate $140,000,000 in net income and has a capital budget of $86,000,000, which will be financed according to the capital structure. The equity portion of the capital budget is 30%, so Red Bison will use 30% of $86,000,000, which amounts to $25,800,000, from its net income for financing the capital projects. If the company uses only $25,800,000 from its $140,000,000 net income for capital investment, it will have $114,200,000 ($140,000,000 - $25,800,000) left to distribute as dividends. The dividend payout ratio is calculated as dividends paid divided by net income. Therefore, the expected dividend payout ratio for Red Bison Petroleum Producers would be $114,200,000 / $140,000,000, which simplifies to 81.57%.
Aqua Corporation purchases nonresidential real property on May 8, 2015, for $1,000,000. Straight-line cost recovery is taken in the amount of $89,765 before the property is sold on November 30, 2018, for $1,500,000
a. Compute the amount of Aqua's recognized gain on the sale of the realty 17,953 X Feedback Check My Work Section 1250 property consists of real property that is not Section 1245 property, generally buildings and their structu When Section 1250 property is sold there is a possibility of Section 1250 depreciation recapture.
b. Determine the amount of the recognized gain that is treated as § 1231 gain and the amount that is treated as § 1250 recapture due to § 291. S 1231 gain 71,812 X § 1250 recapture due to § 291:
Answer:
See the pictures attached
Explanation:
During the year, TRC Corporation has the following inventory transactions. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 53 $ 45 $ 2,385 Apr. 7 Purchase 133 47 6,251 Jul. 16 Purchase 203 50 10,150 Oct. 6 Purchase 113 51 5,763 502 $ 24,549 For the entire year, the company sells 433 units of inventory for $63 each. Required: 1. Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit
To calculate financial metrics for TRC Corporation using FIFO, we find that the sales revenue is $27,279, COGS is $21,030, ending inventory is $3,519, and gross profit is $6,249. These calculations show the impact of FIFO on TRC Corporation's financials.
Explanation:To calculate the ending inventory, cost of goods sold (COGS), sales revenue, and gross profit for TRC Corporation using the FIFO (First In, First Out) inventory method, we follow these steps:
Sales Revenue: Multiply the number of units sold by the sales price per unit. For TRC Corporation, that's 433 units at $63 each, equalling $27,279.Cost of Goods Sold (COGS): Since we are using FIFO, we sell the oldest stock first. Therefore, we sum up the cost of the first 433 units sold. This includes all 53 units of the beginning inventory at $45 each, all 133 units of the April purchase at $47 each, all 203 units of the July purchase at $50 each, and 44 units (433 total units sold minus 53, 133, and 203 units from earlier batches) from the October purchase at $51 each. The total COGS is $2,385 (beginning inventory) + $6,251 (April purchase) + $10,150 (July purchase) + $2,244 (44 units from the October purchase at $51 each) = $21,030.Ending Inventory: The remaining 69 units (from the October purchase of 113 units) at $51 each total $3,519. So, the ending inventory is $3,519.Gross Profit: Subtract the COGS from the sales revenue. $27,279 (sales revenue) - $21,030 (COGS) = $6,249.This calculation provides a clear picture of TRC Corporation's inventory, showing how the FIFO method impacts the company's financial metrics.
As a result of an increase in the value of the dollar in relation to other currencies, American producers now pay less in dollar terms for foreign steel, a major commodity used in production. This will cause a the aggregate curve to the _____________
Answer:
It will shift to the right
Explanation: When the value to dollar in relation to other currencies increases,It will be favourable to the American investors as they will spend less in Dollar terms for the goods supplied and services rendered by citizens of other countries where the United States Dollars have a favourable exchange rate against their own currencies this will cause the AGGREGATE SUPPLY CURVE TO SHIFT TO THE RIGHT INDICATING A FAVOURABLE AGGREGATE SUPPLY.
5. Problems and Applications Q5 In the 1990s and the first two decades of the 2000s, investors from the Asian economies of Japan and China made significant direct and portfolio investments in the United States. At the time, many Americans were unhappy that this investment was occurring. True or False: It was better for the United States to receive this foreign investment because it would lead to faster economic growth. True False True or False: It would have been better for Americans to have made this investment because then they would have received the returns on the investment themselves. True False
Answer:
a) True b) True c) False
Explanation:
a) It is true that Americans were unhappy that investors from the Asian economies of Japan and China were making investments because they thought it would hinder the domestic investment
b) China and Japan were two of the fastest growing economies in that era. Investment by them meant greater capital bringing more job opportunities and faster economic growth.
c) Yes, had the Americans made this investment, they would have received the returns on investment themselves but as foreign investment brings foreign skills and resources in the host country fueling innovation, developing work force, allowing export of American-made goods to other countries. Foreign Investment always brings benefits to host as well as home country and has broader useful impact than if the country relies on domestic investment only
An important lesson about pricing is a. When bargaining with the customer, do not bargain over the unit price, bargain over the bundled price b. Bargain with the customer over everything c. When bargaining with the customer, do not bargain over the bundled price, bargain over unit price d. Do not bargain with the customer
Answer:
The correct answer is letter "A": When bargaining with the customer, do not bargain over the unit price, bargain over the bundled price.
Explanation:
Bargaining is the act by which a buyer and a seller discuss what should be the price the buyer should pay and the seller should accept for a product or service. From the seller side, it is convenient if the bargain is done in bundled goods since the overall discount could be offset by the discount of one or two units included in the bundle. If case the bargain is only negotiated for one unit, the sellers' expected profit will be reduced.
You get a loan for $100,000 today and will pay it back with yearly payments of $10,000 each year in years 1 to 10. In addition, you will make a single dollar payment in year 3. How big must the single payment be, if the loan charges 6.00% APR (compounded annually)
Answer:
$31,442
Explanation:
The computation is shown below:
Years Cash flows Discount factor Present value
0 $100,000.00 1 $100,000.00
1 $10,000.00 0.9433962264
2 $10,000.00 0.88999644
3 0.839619283
4 $10,000.00 0.7920936632
5 $10,000.00 0.7472581729
6 $10,000.00 0.7049605404
7 $10,000.00 0.6650571136
8 $10,000.00 0.6274123713
9 $10,000.00 0.5918984635
10 $10,000.00 0.5583947769
Total 7.3600870514
Now the present value is
= $10,000 × 7.3600870514
= $73,600.87
The single payment is
= $100,000 - $73,600.8705
= $26,399.1295
After considering the 6% APR, it is
= $26,399.1295 ÷ 0.839619283
= $31,441.72
The discount factor should be computed below
= 1 ÷ (1 + rate) ^ years
where,
rate is 6%
Year = 0,1,2,3,4 and so on
Consider the following information: Portfolio Expected Return Beta Risk-free 6 % 0 Market 10.2 1.0 A 8.2 1.4 a. Calculate the return predicted by CAPM for a portfolio with a beta of 1.4. (Round your answer to 2 decimal places.) b. What is the alpha of portfolio A. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)
Answer:
a. 11.88%
b. -3.68%
Explanation:
Given that
Risk free rate = 6%
Beta = 1.4%
Market rate = 10.2%
Risk free rate = 6%
Alpha return = 8.2%
a. The computation of expected return of portfolio is given below:-
= Risk free rate + Beta (Market rate - Risk free rate)
= 6% + 1.4% (10.2% - 6%)
= 11.88%
b. The calculation of Alpha of portfolio is shown below:-
= Alpha return - Expected return
= 8.2% - 11.88%
= -3.68%
In a period of increasing for housing, would you expect housing prices to rise more in Miami suburbs, which had room for expansion and fairly loose laws about subdivisions, or in a city such as San Francisco, which had limited land and tight subdivision restrictions?
Answer:
House prices would be higher in San Francisco
Explanation:
House prices are very similar to prices of other goods and services. It is generally set by the market equilibrium, where the demand for housing meets the supply of housing.
Limited land in San Francisco means that the supply of housing would be low and unable to meet rises in quantity demanded. There would be a shortage of houses since the quantity demanded would be higher than the quantity supplied. Therefore, with a rise in demand, house prices are also likely to increase. On the other hand, Miami offers a lot of room for expansion which suggests that the supply of housing would be able to easily meet the quantity demanded. Thus, housing prices in Miami won’t be as high as those in San Francisco.
Merrill Corp. has the following information available about a potential capital investment: Initial investment $ 1,700,000 Annual net income $ 190,000 Expected life 8 years Salvage value $ 250,000 Merrill’s cost of capital 10 % Assume straight line depreciation method is used. Required: 1. Calculate the project’s net present value. 2. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 10 percent. 3. Calculate the net present value using a 15 percent discount rate. 4. Without making any calculations, determine whether the internal rate of return (IRR) is more or less than 15 percent.
Answer:
1./
INITIAL INVESTMENT
= $1600000
ANNUAL NET CASH FLOW
= NET INCOME + DEPERICATION
= $250000 + [($1600000 - $350000) / 8]
= $250000 + $156250
= $406250
SALVAGE VALUE
= $350000
NPV
= -$1600000 + $406250 * PVIFA 10%, 8 PERIODS + $350000 * PVIF 10% *PERIOD
= -$1600000 + $406250 * 5.3349 + $350000 * 0.4665
= -$1600000 + 2167303.13 + $163275
= $730578.13
2./
AS THE NPV IS GREATER THAN 0 OR POSITIVE THE IRR IS GREATER THAN 10%
3./
INITIAL INVESTMENT
= $1600000
ANNUAL NET CASH FLOW
= NET INCOME + DEPERICATION
= $250000 + [($1600000 - $350000) / 8]
= $250000 + $156250
= $406250
SALVAGE VALUE
= $350000
NPV
= -$1600000 + $406250 * PVIFA 20%, 8 PERIODS + $350000 * PVIF 20% *PERIOD
= -$1600000 + $406250 * 3.8372 + $350000 * 0.2326
= -$1600000 + $1558862.5 + $81410
= $40272.5
4./
AS THE NPV IS GREATER THAN 0 OR POSITIVE THE IRR IS GREATER THAN 20%
Explanation:
The net present value (NPV) of the project is approximately $102,275.15. The internal rate of return (IRR) cannot be determined without making calculations. To calculate the NPV using a 15% discount rate, the same steps are followed but with a 15% discount rate instead of 10%.
Explanation:To calculate the net present value (NPV) of the project, we need to discount the future net income and salvage value using the cost of capital. The NPV is the sum of the present values of each cash flow. In this case, the initial investment of $1,700,000 is not discounted because it occurs in the present. The annual net income of $190,000 is discounted for 8 years using a 10% discount rate. The salvage value of $250,000 is discounted back to the present using the same 10% discount rate.
The NPV can be calculated as follows:
NPV = -Initial Investment + Present Value of Net Income + Present Value of Salvage Value
NPV = -$1,700,000 + ($190,000 / 1.10^1) + ($190,000 / 1.10^2) + ... + ($190,000 / 1.10^8) + ($250,000 / 1.10^8)
By calculating this expression, we find that the project's NPV is approximately $102,275.15.
To determine whether the internal rate of return (IRR) is more or less than 10%, we compare the IRR to the cost of capital. If the IRR is greater than the cost of capital, the project is considered favorable. In this case, the IRR is not given, so we cannot determine whether it is more or less than 10% without making calculations.
If we want to calculate the NPV using a 15% discount rate, we follow the same steps as before but use a 15% discount rate instead of 10%. However, without any specific cash flows or further information, it is not possible to calculate the exact NPV using a 15% discount rate. We can only provide an estimation based on the given information.
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A shoe factory produces 20 units of output. Its average fixed cost (AFC) = $25, average total cost (ATC) = $35, and marginal cost (MC) = $15. The shoe factories average variable cost (AVC) is ________.
Answer:
$10
Explanation:
Data provided in the question
Number of units produced = 20 units
Average fixed cost = $25
Average total cost = $35
Marginal cost = $15
As we know that
Average total cost = Average fixed cost + average variable cost
$35 = $25 + average variable cost
So, the average variable cost is
= $35 - $25
= $10
The average total cost is the sum of average fixed cost and the average variable cost
Final answer:
The average variable cost (AVC) is $0.50.
Explanation:
The average variable cost (AVC) can be calculated by dividing the variable cost by the quantity produced.
In this case, the AFC is $25, the ATC is $35, and the MC is $15.
We can calculate the variable cost by subtracting the fixed cost from the total cost.
Since the AFC is given as $25 and the ATC is given as $35 for a production of 20 units, we can find the variable cost as $35 - $25 = $10.
Then, we can calculate the AVC by dividing the variable cost by the quantity produced, which is $10 / 20 = $0.50.
Walton Company, which produces and sells a small digital clock, bases its pricing strategy on a 25 percent markup on total cost. Based on annual production costs for 15,000 units of product, computations for the sales price per clock follow. Unit-level costs $ 330,000 Fixed costs 78,000 Total cost (a) 408,000 Markup (a × 0.25) 102,000 Total sales (b) $ 510,000 Sales price per unit (b ÷ 15,000) $ 34 Required Walton has excess capacity and receives a special order for 4,000 clocks for $25 each. Calculate the contribution margin per unit. Based on this, should Walton accept the special order? Prepare a contribution margin income statement for the special order.
Explanation:
The computation of the contribution margin per unit is shown below:
Burt for that first we have to determine the variable expense per unit which is shown below:
Variable costs per unit = $330,000 ÷ 15,000 units
= $22
Now the contribution margin per unit is
= Selling price per unit - variable expense per unit
= $25 - $22
= $3
Therefore, the special order is accepted
And, the preparation of the contribution margin income statement is shown below:
Sales (4,000 clocks × $25) $100,000
Less: Variable cost (4,000 clocks × $22) ($88,000)
Contribution margin $12,000
Assume that you are planning to test a client's account reconciliation. you could test either by inspecting documentation of the reconciliation or by rerperforming the reconciliation. What factors would cause you to choose re-performance instead of inspection of documentation?
Final answer:
Choosing between re-performing a client's account reconciliation and inspecting documentation depends on the assurance needed, risk of misstatement, quality of client documentation, and historical errors. Re-performance is more direct and reliable but also more time-consuming compared to documentation inspection.
Explanation:
When planning to test a client's account reconciliation, the choice between re-performing the reconciliation and inspecting documentation depends on several factors. Re-performance might be chosen over documentation inspection if there's a need for higher assurance, when the risk of material misstatement is deemed to be high, or when the documentation provided by the client is not sufficiently detailed or objective. Moreover, if there's a history of errors in the client's accounting processes or discrepancies noted in previous audits, an auditor might opt for re-performance to verify the accuracy of the current reconciliation process.
Re-performance provides the auditor with first-hand evidence regarding the effectiveness of the client's internal controls and the accuracy of their account reconciliation. It is a more direct and often a more reliable method of testing than examining documentation, which could be incomplete or misleading. However, it is also more time-consuming and costly. In contrast, inspecting documentation can be efficient and effective when the internal controls environment is strong, and no significant issues have arisen in the past.
How is the shadow banking system the same as the traditional banking system?A) It intermediates the flow of funds between net savers and net borrows.B) It serves as a middle man.C) The complete credit intermediation is performed through a series of steps involving many nonbank financial service firms.D) The complete credit intermediation is performed by a single bank.
Final answer:
The Shadow Banking System and traditional banks both function as financial intermediaries, mediating the flow of funds between savers and borrowers, and acting as a middle man to reduce transaction costs.
Explanation:
The Shadow Banking System is similar to the traditional banking system in that it serves as a financial intermediary. One way it is the same is by intermediating the flow of funds between net savers and net borrowers, which is articulated in option A. Both systems help to facilitate the exchange of funds, reducing transaction costs, and serving as a form of middle man by connecting those with excess funds who wish to save with those who are in need of borrowing funds.
However, unlike traditional banks which perform the complete credit intermediation through a single entity, the shadow banking system involves a series of nonbank financial service firms, as mentioned in option C. Banks as financial intermediaries accept deposits and then use these to make loans, operating between savers and borrowers.
New brands with small market shares tend to spend higher on advertising and sales promotions than those with large market shares because: Group of answer choices spending more will inhibit the advertising response function. the value of market shares is directly proportionate to the amount of money spent on advertising. returns multiply beyond a certain level of spending. a certain minimum level of exposure is needed to measurably affect purchase habits.
Answer:
The value of market shares is directly proportionate to the amount of money spent on advertising
Explanation:
Advertising is part and parcel of promotion, which is targeted at encouraging customers to buy one's product by taking them through the AIDA sequence of promotion.
AIDA is an acronym for Awareness,Interest,Desire and Action, where creating awareness by bringing the products to the attention of the customers through advertising results in interest and desire being aroused and eventually leading to action of buying the product which ultimately leads to repeat buying and increase in market share overall.
Hagrid Company has a weighted average contribution margin per unit of $5.00. Fixed costs are $104,332 This yoga company sells three products, and anticipates the following sales volume next year. Yoga Videos Yoga Equipment Yoga Mats Total Units 13,000 units 15,000 units 12,000 units 40,000 units What is the breakeven quantity for Yoga MATS next year
Answer:
Break-even units= 6,260 units
Explanation:
Giving the following information:
Hagrid Company has a weighted average contribution margin per unit of $5.00.
Fixed costs are $104,332.
Sales volume next year:
Yoga Videos= 13,000 units
Yoga Equipment= 15,000 units
Yoga Mats= 12,000
Total Units= 40,000 units
First, we need to calculate the break-even point in units.
Break-even point= fixed costs/ contribution margin
Break-even point= 104,332/5= 20,866 units
Now, we can calculate the break-even point units for Yoga Mats:
Weighted participation in sales= 12,000/40,000= 0.3
Break-even units= 20,866*0.3= 6,260 units
Final answer:
To calculate the breakeven quantity for Yoga Mats specifically, we need individual product contribution margins or selling prices. However, given the provided information, we can only estimate the overall breakeven volume at 20,867 units and assume an even distribution across products, approximating 6,956 units for Yoga Mats.
Explanation:
To find the breakeven quantity for Yoga Mats for the next year, we need to calculate the total number of units that need to be sold to cover the fixed costs, taking into account the weighted average contribution margin per unit. Given that Yoga Company, Hagrid Company, has fixed costs of $104,332 and a weighted average contribution margin per unit of $5.00, we can use the breakeven point formula:
Fixed Costs / Contribution Margin per Unit = Breakeven Volume
So, $104,332 / $5.00 = 20,866.4 units. Since you cannot sell a fraction of a unit, we round up to the next whole number, resulting in 20,867 units being the overall breakeven volume for the Hagrid Company.
The question is about the breakeven quantity specifically for Yoga Mats. If the company sells the units evenly across the products, we can divide the total breakeven volume by the number of products. However, to find the exact breakeven quantity for Yoga Mats alone without additional information on the individual contribution margins or selling prices of each product is not possible.
If we assume that the units are sold evenly, that would be 20,867 total units / 3 products = approximately 6,956 units per product to reach breakeven. This assumption may not reflect the real dynamics but gives an approximate idea.
Rowan Co. purchases 900 common shares (40%) of JBI Corp. as a long-term investment for $580,000 cash on July 1. JBI Corp. paid $11,000 in total cash dividends on November 1 and reported net income of $220,000 for the year.
Prepare Rowan's entries to record the purchase of JBI shares, the receipt of its share of JBI dividends and the December 31 year-end adjustment for its share of JBI net income.
Answer:
See explanation section
Explanation:
Rowan Co.
Journal Entries
1. July 1 Investment - JBI Corp. Debit $580,000
Cash Credit $580,000
(As Rowan purchases JBI co. share as an investment, an asset (Investment) increases and another asset (Cash).
2. November 1 Cash Debit $4,400
Dividend on Investment - JBI Corp. Credit $4,400
(As JBI co. received dividend, Rowan co. received cash for investing in JBI co.'s 40%)
Calculation: $11,000 × 40% = $4,400.
3. December 31 Investment - JBI Co. Debit $88,000
Share of Net Income - JBI Co. Credit $88,000
(As Rowan Co. purchases JBI company' s share, they will receive the share of net income of JBI co.)
Calculation: $220,000 × 40% = $88,000
When Jeff Bezos founded Amazon in 1994, he was laying the foundation for the world’s largest ________, because Amazon uses the Internet to make its products and services available to its consumers.
Answer:
correct answer is electronic marketing channel
Explanation:
Amazon is American multinational technology company that was founded on July 5, 1994 by Jeff Bezos
Amazon initially start an online marketplace for the book but later expand to sell software, electronic , video games, and furniture and toy etc
as it is an online retail store that make product and service to customers
so that it is an electronic market channel.
so correct answer is electronic marketing channel
On December 31, after adjustments, Gonzalez Company's ledger contains the following account balances: 101 Cash $ 27,200 Dr. 111 Accounts Receivable 15,800 Dr. 121 Supplies 2,000 Dr. 131 Prepaid Rent 38,600 Dr. 141 Equipment 44,000 Dr. 142 Accumulated Depreciation—Equip. 1,000 Cr. 202 Accounts Payable 6,500 Cr. 301 Emilio Gonzalez, Capital (12/1/2019) 45,620 Cr. 302 Emilio Gonzalez, Drawing 6,200 Dr. 401 Fees Income 112,400 Cr. 511 Advertising Expense 3,800 Dr. 514 Depreciation Expense—Equip. 800 Dr. 517 Rent Expense 2,600 Dr. 519 Salaries Expense 18,800 Dr. 523 Utilities Expense 5,720 Dr. Required: Journalize the closing entries in the general journal. Post the closing entries to the general ledger accounts. Hint: Be sure to enter beginning balances. Analyze: What is the balance of the Salaries Expense account after closing entries are posted?
Answer:
Fees Income 112,400 debit
Income Summary 112,400 credit
Income Summary 31,720 debit
Advertising Expense 3,800 credit
Depreciation Expense—Equip 800 credit
Rent Expense 2,600 credit
Salaries Expense 18,800 credit
Utilities Expense 5,720 credit
income summary 80,680 debit
Emilio Gonzalez, Drawing 6,200 credit
Emilio Gonzalez, Capital 74,480 credit
Explanation:
We close the temporary account which are, reveneus and expenses against income summary then we close this account balance against Emilio Capital Account along with Emilio's drawings.
To journalize the closing entries in the general journal, transfer account balances to the Income Summary account and close it to the owner's capital account. The balance of the Salaries Expense account will be zero after closing entries are posted.
Explanation:In order to journalize the closing entries in the general journal, we need to transfer the balances of certain accounts to the Income Summary account and then close the Income Summary account to the owner's capital account. Here are the closing entries:
Debit all revenue accounts to the Income Summary account. In this case, Debit Fees Income $112,400.Credit all expense accounts to the Income Summary account. In this case, Credit Advertising Expense $3,800, Depreciation Expense—Equip. $800, Rent Expense $2,600, Salaries Expense $18,800, and Utilities Expense $5,720.Debit the owner's capital account to the Income Summary account. In this case, Debit Emilio Gonzalez, Capital $112,400.Credit the owner's drawing account to the owner's capital account. In this case, Debit Emilio Gonzalez, Drawing $6,200.After these closing entries are posted, the balance of the Salaries Expense account will be zero.
auro Products distributes a single product, a woven basket whose selling price is $15 per unit and whose variable expense is $12 per unit. The company’s monthly fixed expense is $4,200. Required: 1. Calculate the company’s break-even point in unit sales. 2. Calculate the company’s break-even point in dollar sal
Answer:
(1) 1,400 units
(2) $21,000
Explanation:
Given that,
Selling price = $15 per unit
Variable expense = $12 per unit
Fixed expense = $4,200
Contribution margin per unit:
= Selling price - Variable expense
= $15 - $12
= $3
Contribution margin ratio :
= Contribution margin per unit ÷ Selling price per unit
= $3 ÷ $15
= 0.2 or 20%
1. Break even point:
= Fixed expense ÷ Contribution margin per unit
= $4,200 ÷ $3
= 1,400 units
2. Break even point in dollar sales:
= Fixed expenses ÷ Contribution margin ratio
= $4,200 ÷ 20%
= $21,000
Barnett Corporation owns an office building that cost $900,000. Barnett has taken $600,000 of depreciation on the building. The property is subject to a $600,000 mortgage. The office building has a current FMV of $400,000. Barnett Corporation is liquidated and the office building is distributed to a single individual shareholder who assumes the mortgage. Barnett Corporation must recognize what gain?
Answer:
$300,000 gain.
Explanation:
We will find the Barnett Corporation basis in the building = Cost - depreciation $900,000 - $600,000 = $300,000
When the office building is liquidated, the worth of the building is atleast the amount of liability that is assumed on the building. The building is subject to a $600,000 mortgage.
The liability assumed is $600,000;
To find out the gain Barnett Corporation must recognize,
= Liability - Barnett Corporation Basis
= $600,000 - $300,000 = $300,000.
Therefore, Barnett's gain is $300,000.