Answer:
$833.33
Explanation:
Annual Interest Paid = $50
Market Interest rate = 6%
The approximate market value = Annual interest paid / Market Interest rate
The approximate market value = $50 / 6%
The approximate market value = $50 / 0.06
The approximate market value = 833.3333333333333
The approximate market value = $833.33
During 20x1, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows:________.
FIFO Weighted-average
January 1, 20x1 $71,000 $77,000
December 31, 20x1 $79,000 $83,000
Orca's income tax rate is 30%.
In its 2005 financial statements, what amount should Orca report as the cumulative effect of this accounting change?
a) $2,800
b) $4,000
c) $4,200
d) $6,000
Answer:
Orca Corp.
The cumulative effect of this accounting change in estimate is:
That the cost of goods sold will be reduced by:
b) $4,000
Explanation:
a) Data and Calculations:
FIFO Weighted-average Difference
January 1, 20x1 $71,000 $77,000 $6,000
December 31, 20x1 $79,000 $83,000 $4,000
Orca's income tax rate is 30%.
Note that the difference in the cost of the beginning inventory does not have any effect in the current period's financials. It was an estimate that was done previously and Orca does not need to restate its financials for the previous year because of the change. The accounting change only affects the current period.
Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $22,000 in 2019. What is their allowable child and dependent care credit considering their pre-credit tax liability
Answer:
$0
Explanation:
The computation of the their allowable child and dependent care credit is shown below:
In the case when the income is below $35,000 than full 35% would be allowed
But the qualified child expense would be limited to $6,000
So, here the amount would be
= $6,000 × 35%
= $1,860
Already there is a pre credit tax liability so $0 should be considered as it would not received any credit
Parent Corporation acquired 100% of Sub Corporation on January 1, 2020 for $285,000. The trial balances for the two companies on December 31, 2020, included the following amounts: Other information: 1. Out of the total purchase price, $60,000 is paid for the goodwill. However, the manager assess the reporting division and estimated that 50% of the goodwill has impaired. 2. The rest of the differential is split between the building and equipment (40%) and inventory (60%). By the end of the year, Sub Corp sold 50% of all the inventories acquired. The building and equipment has five years of remaining economic life and the company uses the straight line depreciation. 3. Sub Corp owed Parent Corp $20,000 in the form of accounts of payable as of December 31, 2020. Task 1a: Calculate the amount of differential? Task 1b: What is the amount of excess value (i.e., fair value above the book value)? Task 1c: What is the book value of Sub’s net asset? Task 2: Give all journal entries recorded by Parent with regard to its investment in Sub during 2020.
Answer:
Note: The full question is attached as picture
Task 1
a. Net Assets of Company = Common Stock + Retained Earning = $25,000 + $115,000 = $140,000
Amount of Differential on purchase of Company = Purchase price - Net Assets
Amount of Differential on purchase of Company = $285,000 - $140,000
Amount of Differential on purchase of Company = $145,000
b. Excess Value = $145,000 - $60,000 = $85,000
c . Book Value of Sub's Net Assets = $140,000
Task 2
Journal entries recorded by Parent with regard to its investment in Sub during 2020.
Date Description and Explanation Debit Credit
Investment in Sub Corp $285,000
To Bank $285,000
(Being purchase consideration paid)
Lake Sales had $2,200,000 in sales last month. The contribution margin ratio was 30% and operating profits were $180,000. What is Lake's break-even sales volume
Answer:
$1,600,000
Explanation:
Sales
$2,200,000
Contribution margin ratio
30%
$660,000
Sales $2,200,000
Contribution margin $660,000
Operating profit $180,000
Fixed cost = Contribution margin - Operating profit
= $660,000 - $180,000
= $480,000
Break even sales = Fixed cost / Contribution margin ratio
= $480,000 / 30%
= $1,600,000
Therefore, Lake's break even sales volume is $1,600,000
Ford Motor Company has issued 8% convertible debentures, convertible at a 25:1 ratio. Currently the debenture is trading at 110. The stock is trading at 38. What is the conversion price of the stock
Answer:
40
Explanation:
Calculation for the conversion price
Based on the information given we were told that the company's convertible ratio is 25:1 which simply means that 1,000 par will be divided by the covertible ratio .
Hence,
Conversion price of the stock = 1,000/25
Conversion price of the stock = 40
Therefore the Conversion price of the stock will be 40
If there was a 24% chance of having a contract signed to purchase a home in any one month and there were 55 homes on the market, what would be the probability that exactly 15 of them would have a contract signed during this month?
a. 10.3%
b. 24.0%
c. 66.7%
d. 23.0%
Answer:
a. 10.3%
Explanation:
P∝F of Binomial distribution is given as Pr.(x=x) = nCxP^x(1-p)^(n-x)
P = 0.24, n= 55, x =15 Note: C = Combination
Pr.(x = 15) = 55"C"15(0.24)^15(0.76)(55-15)
Pr.(x = 15) = 55"C"15(0.24)^15(0.76)^40
Pr.(x = 15) = 0.1026
Pr.(x = 15) = 10.26%
Pr.(x = 15) = 10.3%
A machine with a cost of $150,000 and accumulated depreciation of $95,000 is sold for $70,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:
Answer:
$0
Explanation:
The operating activities section of the cash flow statement under the direct method records the cash receipts with regard to sale of the products and the cash payments with regard to expenses
Therefore in the given case, it would be $0 as there is no transaction occured that should be reported in the operating activities section of the cash flow statement
The same is to be considered
Clark Company estimated the net realizable value of its accounts receivable as of December 31, 2019, to be $167,000, based on an aging schedule of accounts receivable. Clark has also provided the following information: The accounts receivable balance on December 31, 2019 was $177,400. Uncollectible accounts receivable written off during 2019 totaled $12,200. The allowance for doubtful accounts balance on January 1, 2019 was $15,400. How much is Clark's 2019 bad debt expense
Answer: $7200
Explanation:
Clark's 2019 bad debt expense will be calculated thus:
Balance for allowance for doubtful accounts will be:
= $177400 - $167000
= $10400
The Uncollectible accounts written off will be:
= $15400 - $12200
= $3200
Clark's 2019 bad debt expense:
= $10400 - $3200
= $7200
Answer:
sry need to answer (points) :(
Explanation:
What is the present value of the following cash-flow stream if the interest rate is 5%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Year Cash Flow
1 $250
2 450
3 350
Answer:
Total PV= $948.6
Explanation:
Giving the following information:
Year Cash Flow
1 $250
2 450
3 350
Interest rate= 5%
To calculate the present value, we need to use the following formula on each cash flow:
PV = Cf/(1+i)^n
PV1= 250/1.05= 238.1
PV2= 450/1.05^2= 408.16
PV3= 350/1.05^3= 302.34
Total PV= $948.6
The number of compounding periods in one year is called compounding frequency. The compounding frequency affects both the present and future values of cash flows. An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity?
Interest Rates
Nominal rate 4.40%
Periodic rate 1.10%
Effective annual rate 4.47%
Rahul needs a loan and is speaking to several lending agencies about the interest rates they would charge and the terms they offer. He particularly likes his local bank because he is being offered a nominal rate of 4%. But the bank is compounding daily. What is the effective interest rate that Rahul would pay for the loan?
a. 4.081%
b. 4.202%
c. 3.959%
d. 4.395%
Another bank is also offering favorable terms, so Rahul decides to take a loan of $22,000 from this bank. He signs the loan contract at 9% compounded daily for nine months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.)
a. $24,477.81
b. $24,948.54
c. $23,536.36
d. $24,007.09
Answer:
1. a. 4.081%
2. c. $23,536.36
Explanation:
1. Periodic rate=(4.4%/4) = 1.1%
EAR=(1+APR/m)^m-1
where m=compounding periods
= (1+0.044/4)^4-1
= 1.011^4 - 1
= 1.04473133864 - 1
= 0.04473133864
= 4.47%
EAR=(1+APR/m)^m-1
where m=compounding periods
=(1+0.04/365)^365-1
= (1+0.00010958904)^365 - 1
= 1.00010958904^365 - 1
= 1.04080849272 - 1
= 0.04080849272
= 4.081%
2. A=P(1+r/365)^365*n
where A=future value, P=present value, r=rate of interest, n=time period.
= 22000*(1+9%/365)^(9/12*365)
= $23,536.36
Your parents will retire in 27 years. They currently have $280,000 saved, and they think they will need $1,900,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
Answer:
Annual Rate=7.35%
Explanation:
Calculation for the annual interest rate must they earn to reach their goal
Number of years =27
PV =280,000
FV =1,900,000
Using this formula
Annual Rate=(FV/PV)^(1/n)-1
Let plug in the formula
Annual Rate=(1,900,000/280,000)^(1/27)-1
Annual Rate=6.7857^(1/27)-1
Annual Rate=1.07349-1
Annual Rate=0.0735
Annual Rate=7.35%
Therefore the annual interest rate must they earn to reach their goal will be 7.35%
ACE Co. stock is not paying a dividend today, but has announced it will start paying a dividend in year 4 of $2.00 per share, and that will increase 5% per year forever. What is an estimate of the price of the stock today if r
Answer:
$77.22
Explanation:
the question is incomplete, so I looked for a similar question and found that Re = 9%
Div₀ = 0
Div₁ = 0
Div₂ = 0
Div₃ = 0
Div₄ = $2
the terminal value at year 3 = Div₄ / (Re - g) = $4 / (9% - 5%) = $100
in order to determine the current stock price we must discount $100 by 9% for 3 periods = $100 / 1.09³ = $77.22
For an effective frame, the primary business message should be approximately ______ words in length.
Answer:
10 to 15
Explanation:
Business messaging in accounting can be described as a set of channels that provide means by which the firms/ company and the consumer can have effective communication.
The primary business message is very essential in business, it must reflect clarity as well as simplicity, it enables company to pass their overarching information to the consumer, they are intentional content. In a situation whereby operations in a company needed relocation, primary message is passed. It should be noted that For an effective frame, the primary business message should be approximately 10 to 15 words in length.
Hello!
For an effective frame, the primary business message should be approximately 10 to 15 words in length.
Doreen has preferences represented by the utility function U(x, y) = 10x + 5y. She consumes 10 units of good x and 9 units of good y. If her consumption of good x is lowered to 1, how many units of y must she have in order to be exactly as well off as before?
Answer:
she must consume 11 units of good Y
Explanation:
Doreen's current utility = (10 x 10) + (5 x 9) = 145 utils
if she consumes only 9 goods of X, her utility will be:
90 + 5Y
the amount of good Y that makes both equations equal is:
90 + 5Y = 145
5Y = 55
Y = 55 / 5 = 11 units
paid to acquire , a weekly advertising paper. At the time of the acquisition, 's balance sheet reported total assets of and liabilities of . The fair market value of 's assets was . The fair market value of 's liabilities was . Read the requirementsLOADING.... Requirement 1. How much goodwill did purchase as part of the acquisition of ? Purchase price to acquire Mesa Herald Market value of Mesa Herald's assets Less: Market value of Mesa Herald's liabilities Less: Market value of Mesa Herald's net assets
Full question attached
Answer and Explanation:
A. Given that Thrifty Nickels Assets fair value and liabilities are given by $100000 and $70000 respectively(we do not use the book value in calculating goodwill here) and Acquisition value is $230000
Goodwill = purchase price -net assets
Since we know purchase price =$230000
We calculate net assets= total assets -total liabilities
Total assets =$100000
Total liabilities =$70000
Net assets=$100000-$70000=$30000
We substitute in goodwill formula
Goodwill=$230000-$30000=$200000
Therefore goodwill =$200000
B. We journalize entries for the acquisition in Deca's books as follows :
Debit Assets $100000
Debit Goodwill $200000
Credit liabilities $70000
Credit cash $230000
We debit assets since it received and increased by $100000,we debit goodwill since it also received and increased by $200000. We credit liabilities since it also increased by $70000 from the acquisition (liabilities accounts are credited). Cash was spent and therefore is credited since it reduced by $230000
The following information pertains to Lightning Inc., at the end of December: Credit Sales $ 20,000 Accounts Payable 10,000 Accounts Receivable 12,900 Allowance for Uncollectible Accounts 400 credit Cash Sales 20,000 Lightning uses the aging method and estimates it will not collect 7% of accounts receivable not yet due, 15% of receivables up to 30 days past due, and 48% of receivables greater than 30 days past due. The accounts receivable balance of $12,900 consists of $10,000 not yet due, $1,600 up to 30 days past due, and $1,300 greater than 30 days past due. What is the appropriate amount of Bad Debt Expense
Answer:
$1,164
Explanation:
Calculation for the appropriate amount of Bad Debt Expense
Bad Debt Expense= (10,000 * 0.07) + (1,600 * 0.15) + (1,300 * 0.48) =
Bad Debt Expense=700+240+624
Bad Debt Expense=1,564 -400
Bad Debt Expense=$1,164
Therefore the appropriate amount of Bad Debt Expense will be $1,164
The firm has just declared a dividend of $1.09 per share for the current fiscal year. The firm has earnings per share of $2.11, and 225,000 shares outstanding with a market price of $31.17 per share prior to the ex-dividend day. Ignore taxes. As a result of this dividend, the: A) the current dividend yield is 51.66% B) retained earnings will increase by $245,250. C) the current dividend payout ratio is 3.497% D) earnings per share will increase to $3.20. E) price-earnings ratio will be 14.26 ex-dividend.
Answer: E) price-earnings ratio will be 14.26 ex-dividend.
Explanation:
Stock prices generally decrease in price by the price of the dividend on ex-dividend date.
This means that this stock will reduce to:
= 31.17 - 1.09
= $30.08
Price to Earnings ratio = Stock price/ Earnings per share
= 30.08/2.11
= $14.26
Option E is correct.
CDB stock is currently priced at $85. The company will pay a dividend of $5.69 next year and investors require a return of 11.6 percent on similar stocks. What is the dividend growth rate on this stock?
Answer:
4.91%
Explanation:
CDB stock is currently priced at $85
The company will pay a dividend of $5.69
The required return is 11.6%
There for the dividend growth rate on this stock can be calculated as follows
11.6/100= (5.69/85) + growth rate
0.116= 0.0669 + growth rate
0.116 - 0.0669 = growth rate
0.0491 × 100 = growth rate
Growth rate = 4.91%
Crador Corp. uses a process costing system in which direct materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. Beginning inventory for January consisted of 1,100 units. 14,000 units were started into the process during January. On January 31, the inventory consisted of 800 units. Equivalent units for conversion costs were 14,800. What percentage complete was the ending inventory with respect to conversion costs on January 31 using the weighted-average method
Answer: 62.5%
Explanation:
Equivalent units = Units completed and transferred out + percentage completed of ending inventory
14,800 = (1,100 + 14,000 - 800) + Percentage
14,800 = 14,300 + Percentage amount completed
Percentage amount completed = 14,800 - 14,300
Percentage amount completed = 500 units
Percentage = Ending equivalent units / ending inventory
= (500/800) * 100
= 62.5%
When new facilities are built and operated overseas that require large investment of capital because these new establishments are tailored to the exact needs of the home country firm, it is called a(n) _____.
a. exporting.b. subsidiary.c. strategic alliance.d. multinational enterprise.e. foreign acquisition.
Answer:
b. subsidiary
Explanation:
Subsidiaries are companies that belong to a larger parent company. They are usually established overseas as an extension of the parent company's operations.
Parent companies of the subsidiaries hold controlling interest in stock, therefore they tailor the subsidiaries to their exact needs.
When there is a 100% ownership by the parent company it is called a wholly owned subsidiary
A company has a pension liability of $460,000,000 that it must pay in 29 in years. If it can earn an annual interest rate of 4.2 percent, how much must it deposit today to fund this liability?
a. $133,883,255.09
b. $139,506.351.81
c. 44,08571.14
d. $11755.30770
e. $121423,867.90
Answer:
PV= $139,506,351.8
Explanation:
Giving the following information:
Future Value= $460,000,0000
Number of periods= 29 years
Interest rate= 4.2%
To calculate the initial investment, we need to use the following formula:
PV= FV / (1+i)^n
PV= 460,000,000 / (1.042^29)
PV= $139,506,351.8
In order to accurately assess the capital structure of a firm, it is necessary to convert its balance sheet figures to a market value basis. KJM Corporation's balance sheet as of today is as follows: Long-term debt (bonds, at par) $10,000,000 Preferred stock 2,000,000 Common stock ($10 par) 10,000,000 Retained earnings 4,000,000 Total debt and equity $26,000,000 The bonds have a 4.0% coupon rate, payable semiannually, and a par value of $1,000. They mature exactly 10 years from today. The yield to maturity is 12%, so the bonds now sell below par. What is the current market value of the firm's debt
Answer:
$5,412,000
Explanation:
The semi annual interest = $20
Periods (n) till maturity are 10*2 = 20
Discounting rate is 12%/2 = 6%
Principal amount is $1,000
Market Value = 20 * PVIFA (20,6%) + 1,000 * PVIF (20,6%)
Market Value = 20 * 11.4699 + 1,000 * 0.3118
Market Value = 229.398 + 311.8
Market Value = 541.198
Market value = $541.20
Number of bonds = 10,000,000/1,000
Number of bonds = 10,000
Current market value = Number of bonds * Market value
Current market value = 10,000 * 541.20
Current market value = $5,412,000
A year after buying her car, Anita has been offered a job in Europe. Her car loan is for $27,000 at a 6% nominal interest rate for 48 months. If she can sell the car for $20,000, how much does she get to keep after paying off the loan
Answer:
Instead of keeping a balance she would rather need to pay the remaining mortgage balance of $843.51
Explanation:
The first task here is to compute the monthly payment of the car loan using the formula below:
PMT=P(r/n)/1-(1+r/n)^(-nt)
P=loan amount= $27,000
r=interest rate=6 %
n=number of monthly payments in a year=12
t= duration of loan=4 years ( 48/12)
PMT=27000*(6%/12)/(1-(1+6%/12)^(-4*12)
PMT=27000*(6%/12)/(1-(1+6%/12)^(-48)
PMT=27000*(6%/12)/(1-(1.005)^-48
PMT=135 /(1-0.787098411 )
PMT=634.10
The balance of the loan after one year is the present value of the remaining 36 monthly payments as computed thus:
PV=monthly payment*(1-(1+r)^-n/r
monthly payment=634.10
r=monthly interest rate=6%/12=0.5%
n=number of monthly payments left=36
PV=634.10*(1-(1+0.5%)^-36/0.5%
PV=634.10*(1-0.835644919 )/0.5%
pv=$20,843.51
balance left after paying the loan=$20,000-$20,843.51 =-$843.51
Bob has been investing $4,000 in stock at the end of every year for the past 8 years. If the account is currently worth $45,000, what was his annual return on this investment?a. 10.61%b. 10.91%c. 8.81%d. 9.55%e. 9.07%
Answer:
d. 9.55%
Explanation:
we can use the future value of an annuity formula to calculate Bob's annual return:
future value = annual contribution x FV annuity factor
future value = $45,000
annual contribution = $4,000
FV annuity factor = ?
FV annuity factor = future value / annual contribution = $45,000 / $4,000 = 11.25
FV annuity factor = [(1 + i)ⁿ - 1] / i
11.25 = [(1 + i)⁸ - 1] / i
11.25i = (1 + i)⁸ - 1
solving this problem is really complicated, but there is a much simple way to do it:
e) 11.25 x 0.0907 = (1 + 0.0907)⁸ - 1
1.020375 ≠ 1.0028
d) 11.25 x 0.0955 = (1 + 0.0955)⁸ - 1
1.0744 = 1.0744 ⇒ this option is correct
Pauley Company needs to determine a markup for a new product. Pauley expects to sell 22,000 units and wants a target profit of $16 per unit. Additional information is as follows: Variable product cost per unit $ 18 Variable administrative cost per unit 13 Total fixed overhead 20,500 Total fixed administrative 36,700 Using the variable cost method, what markup percentage to variable cost should be used
Answer:
variable markup % = 60%
Explanation:
total units sold 22,000
total costs associated with selling the 22,000 units:
variable production costs $18 x 22,000 = $396,000
variable S&A costs $13 x 22,000 = $286,000
fixed overhead = $20,500
fixed S&A = $36,700
total costs = $739,200
total cost per unit = $33.60
selling price = $33.60 + $16 = $49.60
markup percentage = [(sales price - unit cost) / unit cost] x 100
the total markup % = [49.60 - 33.60) / 33.60] x 100 = 47.62%
but since we are going to calculate the markup percentage solely based on variable costs, then:
variable cost per unit = $31
selling price = $49.60
the variable markup % = [49.60 - 31) / 31] x 100 = 60%
a. Consumption schedule The variable on the vertical (y) axis is (Click to select) and the variable on the horizontal (x) axis is (Click to select) . These variables are (Click to select) related. b. Saving schedule The variable on the vertical (y) axis is (Click to select) and the variable on the horizontal (x) axis is (Click to select) . These variables are (Click to select) related. c. What is the fundamental reason that the levels of consumption and saving in the United States are each higher today than they were a decade ago
Answer:
a. Consumption schedule
The variable on the vertical (y) axis is Consumption and the variable on the horizontal (x) axis is disposable income .
These variables are directly related.
On the Consumption schedule, the variables on the y axis are the different levels of consumption whilst the variables on the x are amounts of disposable income.
Consumption and disposable income are directly related because when the amount of disposable income increases, the amount that consumers can spend will increase as well as it comes from the disposable income that a consumer has.
b. Saving schedule
The variable on the vertical (y) axis is Saving and the variable on the horizontal (x) axis is disposable income .
These variables are directly related.
On the Saving schedule the x axis which is for the independent variable is the Disposable income whilst the dependent variable on the y axis is for Savings.
Savings and Disposable income are directly relate because when a person has more money after taxes (disposable income), they will be able to save more money.
c. Real GDP and disposable income are higher.
The Real GDP of the United States as well as disposable income have increased over the past decade which means that people are able to both consume and save more s shown above.
A customer buys 1 XYZ Dec 30 call at 7 and sells 1 XYZ Dec 40 call at 1. Two months later, if the customer closes the positions when the spread is trading at 9 points, the customer has
Answer:
Gain of $300
Explanation:
Based on the information given the investor have a debit spread and Since the investor paid a net premium of the amount of $600 which is calculated as : (7 − 1) in which the spread had widened to 9 which means the investor will have a profit or gain of the amount of $300 calculated as :(9 − 6) due to the spread .
Therefore the customer has a gain of the amount of $300 reason been that it is a Debit spreads and secondly Debit spread are often profitable.
a. How much would you pay for a Treasury bill that matures in 182 days and pays $10,000 if you require a 1.8% discount rate?
b. If the Treasury also received $750 million in non-competitive bids, who will receive T-bills, in what quantity, and at what price?
Answer: $9909
Explanation:
Let the amount that will be paid be represented by y. The question can now be solved as:
(10000 - y)/10000 × 360/182 = 0.018
(10000-y)/10000 = 0.018 × 182/360
(10000 - y)/10000 = 0.0091
10000-y = 0.0091 × 10000
10000 - y = 91
y = 10000 - 91
y = $9909
you are planning to organize a get together for alumni. as an organizer send an invitation letter to all alumni
Answer:
hehe
Explanation:
hehe
The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm. Purchased $19,500 of materials on account. Issued $1,150 of supplies from the materials inventory. Purchased $11,900 of materials on account. Paid for the materials purchased in transaction (1) using cash. Issued $14,300 in direct materials to the production department. Incurred direct labor costs of $23,500, which were credited to Wages Payable. Paid $21,900 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant. Applied overhead on the basis of 130 percent of $23,500 direct labor costs. Recognized depreciation on manufacturing property, plant, and equipment of $10,700. The following balances appeared in the accounts of Steve’s Cabinets for April. Beginning Ending Materials Inventory $ 30,690 ? Work-in-Process Inventory 7,300 ? Finished Goods Inventory 33,900 $ 28,990 Cost of Goods Sold 53,730 Required: a. Prepare journal entries to record the transactions. b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.
Answer:
Steve's Cabinets
a. Journal Entries:
Debit Raw materials $19,500
Credit Accounts Payable $19,500
To record the purchase of raw materials on account.
Debit Manufacturing Overhead $1,150
Credit Raw materials $1,150
To record the issue of supplies from inventory.
Debit Raw materials $11,900
Credit Accounts Payable $11,900
To record the purchase of raw materials on account.
Debit Accounts Payable $19,500
Credit Cash Account $19,500
To record payment for raw materials on account.
Debit Work in Process $14,300
Credit Raw materials $14,300
To record the issue of raw materials to production.
Debit Work in Process $23,500
Credit Wages Expense $23,500
To record the transfer of factory wages to production.
Debit Utilities, etc expense $21,900
Credit Cash Account $21,900
Debit Manufacturing overhead $21,900
Credit Utilities, etc expenses $21,900
To record miscellaneous plant expenses.
Debit Work in Process $30,550
Credit Manufacturing overhead $30,550
To apply 130% of direct labor cost of #23,500 to production.
Debit Manufacturing Overhead $10,700
Credit Depreciation Expense $10,700
To recognize depreciation expense.
b. T-accounts
Raw Materials
Account Titles Debit Credit
Beginning balance $ 30,690
Accounts Payable 19,500
Manufacturing overhead $1,150
Accounts Payable 11,900
Work in Process 14,300
Ending balance $ 46,640
$62,090 $62,090
Accounts Payable
Account Titles Debit Credit
Raw materials $19,500
Raw materials 11,900
Cash Account $19,500
Ending balance 11,900
Manufacturing Overhead
Account Titles Debit Credit
Raw materials $1,150
Expenses 21,900
Depreciation 10,700
Work in Process $30,550
Underapplied: Cost of goods sold 3,200
Work in Process
Account Titles Debit Credit
Beginning balance $ 7,300
Raw materials $14,300
Direct labor 23,500
Manuf. Overhead 30,550
Finished Goods $48,820
Ending balance $26,830
Finished Goods Inventory
Account Titles Debit Credit
Beginning balance $ 33,900
Work in Process 48,820
Cost of goods sold $53,730
Ending balance $ 28,990
Cost of goods sold
Account Titles Debit Credit
Finished goods $53,730
Manufacturing overhead:
Underapplied 3,200
Income Statement $56,930
Explanation:
a) Data and Calculations:
Account Balances of Steve’s Cabinets for April.
Beginning Ending
Materials Inventory $ 30,690 ?
Work-in-Process Inventory 7,300 ?
Finished Goods Inventory 33,900 $ 28,990
Cost of Goods Sold 53,730