BUSINESS COLLEGE

Last year, Mountain Top, Inc., purchased a coal mine at a cost of $900,000. The salvage value has been estimated at $100,000. The coal mine has an estimated 200,000 tons of available coal. A total of 70,000 tons were mined and sold during the current year. Complete the necessary adjusting journal entry to record depletion expense for the current year by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answers

Answer 1
Answer:

Answer:

Journal entry to record depletion expense

Depreciation expense $280,000 (debit)

Accumulated depreciation $280,000 (credit)

Explanation:

The coal mine is an economic resource controlled (ownership of risks and benefits) by Last year, Mountain Top, Inc as a result of past event (purchase transaction) from which economic benefits are expected to flow into the business (cash from sale of minerals).Therefore the coal mine is an asset!

The asset is being depleted as it is being used. This is called depreciation.

Depreciation expense in this case is calculated as :

Depreciable Account × Current harvest as a percentage of total estimated tons available

(900000-100000)× 70000/200000 = $280,000
Answer 2
Answer:

Answer:

(Debit) Depletion expense 280,000

(Credit) Accumulated depletion 280,000

Explanation:

The coal mine is an economic resource controlled (ownership of risks and benefits) by Mountain Top, Inc as a result of past event (purchase transaction) from which economic benefits are expected to flow into the business (cash from sale of minerals).We need to record the DEPLETION of what was mined this year.  

The asset is being depleted as it is being used. This is called DEPLETION.

(Cost of Asset - Salvage Value) × Current Units / Estimated Units = Depletion Amount

(900000-100000)× 70000/200000 = $280,000

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b. uneconomical
c. fair
d. courageous
e. just

Answers

Answer:

a. unethical

Explanation:

This company's behavior is unethical. In the globalized world, it is natural for transnational firms to direct their production structure to countries where labor is cheaper, as this makes their product more competitive in the international market. However, these firms must not take advantage of regulatory failures in the labor market in these countries to increase their profit. Every firm must be concerned and ensure that the physical integrity and health of employees who work on its plants is preserved, regardless of location. Thus, in order to act ethically, this firm should implement process improvements to minimize the exposure of employees to chemical agents and to inhibit the exploitation of the labor that occurs when employees work in excess and without being paid for overtime.

A 7X Corp.just paid a dividend of $2.30 per share. The dividend are expected to grow at 23 percent for the next eight years and then level off to a growth rate of 7 percent indefinitely. If the required return is 15 percent, what is the price of the stock today?

Answers

Answer:

 Price of stock=$ 77.88

Explanation:

The Dividend Valuation Model is a technique used to value the worth of an asset. According to this model, the worth of an asset is the sum of the present values of its future cash flows discounted at the required rate of return.  

The price of the stock will the sum of the present value of the growing annuity and the growing perpetuity

Present value of dividend from year 1 to 8

The PV of the growing annuity = A/r-g) ( 1- (1+g)/(1+r)^n )  

A- dividend payable now , r- required of return, g-growth rate, number of years

PV =  (2.30×1.23)/(0.15-0.23)×   (1- (1.23/1.15)^8) = 25.199

PV of Dividend from year 9 and beyond:

P = D× g/(r-g)  

This will be done in two steps:

Step 1: PV(in year 8)of dividend = 2.30× 1.23^8×1.07/(0.15-0.07) = 161.16

Step 2 : PV in year 0 = 161.16× 1.15^(-8)= 52.684

PV of Dividend from year 9 and beyond =  52.684                                  

Price of stock = 25.19  + 52.68= 77.88

 Price of stock=$ 77.88

On January 2, 2021, Ivanhoe, Inc. signed a 10-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $320000 starting at the beginning of the first year, with title passing to Ivanhoe at the expiration of the lease. Ivanhoe treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Ivanhoe uses straight-line depreciation for all of its plant assets. Aggregate lease payments were determined to have a present value of $1966261, based on implicit interest of 10%.In its 2021 income statement, what amount of interest expense should Ivanhoe report from this lease transaction?

Answers

Answer:

interest expense:    $ 164,621.65

Explanation:

We solve for the present value of the lease value:

C * (1-(1+r)^(-time) )/(rate) = PV\n

C 320,000.00

time 10

rate 0.1

320000 * (1-(1+0.1)^(-10) )/(0.1) = PV\n

PV $1,966,261.4738

We made the first payment which decrease our payable:

1,966,261.47 - 320,000 = 1,646,261.47‬

And now, from this amount we solve for the interest expense:

And now, we calculate the 10% interest for the year:

1,646,216.47 x 10% = 164,621.65 interest expense

On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month: Jan. 1 Sharon Matthews transferred cash from a personal bank account to an account to be used for the business, $30,000. 2 Paid rent on office and equipment for the month, $2,450. 3 Purchased supplies on account, $2,200. 4 Paid creditor on account, $850. 5 Earned fees, receiving cash, $14,940. 6 Paid automobile expenses (including rental charge) for month, $1,580, and miscellaneous expenses, $470. 7 Paid office salaries, $2,000. 8 Determined that the cost of supplies used was $1,100. 9 Withdrew cash for personal use, $3,200. Required: 1. Journalize entries for transactions Jan. 1 through 9. Refer to the Chart of Accounts for exact wording of account titles. 2. Post the journal entries to the T accounts, selecting the appropriate date to the left of each amount to identify the transactions. Determine the account balances after all posting is complete. Accounts containing only a single entry do not need a balance. 3. Prepare an unadjusted trial balance as of January 31, 2019. 4. Determine the following: a. Amount of total revenue recorded in the ledger. b. Amount of total expenses recorded in the ledger. c. Amount of net income for January. 5. Determine the increase or decrease in owner’s equity for January.

Answers

Answer:

Required 1.

Jan 1

Cash $30,000 (debit)

Capital $30,000 (credit)

Jan 2

Rent Expense $2,450 (debit)

Cash $2,450 (credit)

Jan 3

Supplies  $2,200 (debit)

Accounts Payable $2,200 (credit)

Jan 4

Accounts Payable $850 (debit)

Cash $850 (credit)

Jan 5

Cash $14,940 (debit)

Fees Earned $14,940 (credit)

Jan 6

Automobile Expenses $1,580 (debit)

Miscellaneous expenses $470 (debit)

Cash $2,050 (credit)

Jan 7

Salaries Expenses $2,000 (debit)

Cash $2,000 (debit)

Jan 8

Supplies Expense $1,100 (debit)

Supplies $1,100 (credit)

Jan 9

Capital $3,200 (debit)

Cash $3,200 (credit)

Required 2

Cash  = $ 34,390 (debit)

Capital  = $ 26,800 (credit)

Rent Expense $2,450 (debit)

Supplies   = $ 1,100 (debit)

Accounts Payable  = $ 1,350 (credit)

Fees Earned $14,940 (credit)

Automobile Expenses $1,580 (debit)

Miscellaneous expenses $470 (debit)

Salaries Expenses $2,000

Supplies Expense $1,100

Required 3.

                                           Debit          Credit

Cash                                $ 34,390

Capital                                                $ 26,800

Rent Expense                   $2,450

Supplies                            $ 1,100

Accounts Payable                                $ 1,350

Fees Earned                                        $14,940

Automobile Expenses      $1,580

Miscellaneous expenses    $470

Salaries Expenses           $2,000

Supplies Expense              $1,100

Totals                               $43,100      $43,100

Required 4.

a. Amount of total revenue recorded in the ledger  = $14,940

b. Amount of total expenses recorded in the ledger = $7,600

c. Amount of net income for January = $7,340

Required 5.

Increased by $4,140

Explanation:

Calculation of T - Account Balances

Cash $30,000 - $2,450 - $850 + $14,940 - $2,050 - $2,000 - $3,200 = $ 34,390 (debit)

Capital $30,000 - $3,200 = $ 26,800 (credit)

Rent Expense $2,450 (debit)

Supplies  $2,200 - $1,100 = $ 1,100 (debit)

Accounts Payable $2,200 - $850 = $ 1,350 (credit)

Fees Earned $14,940 (credit)

Automobile Expenses $1,580 (debit)

Miscellaneous expenses $470 (debit)

Salaries Expenses $2,000

Supplies Expense $1,100

Calculation of  total expenses recorded in the ledger.

Rent Expense                   $2,450

Automobile Expenses      $1,580

Miscellaneous expenses    $470

Salaries Expenses           $2,000

Supplies Expense              $1,100

Total                                  $7,600

Calculation of net income for January.

Sales Revenue                 $14,940

Less Expenses                ( $7,600)

Net Income / (Loss)          $7,340

Calculation of increase or decrease in owner’s equity for January.

Net Income / (Loss)          $7,340

Less Drawings                 ($3,200)

Change                             $4,140

Therefore, Owners Equity Increased by $4,140

Ash is the preferred wood to be used in the production of baseball bats. If a company was to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created? A. problems raising capital
B. patents and copyright law
C. control of resources
D. economies of scale
E. licensing

Answers

Answer:

C. control of resources

Benton Company issues $10,000,000 of 10-year, 9% bonds on April 1, 2017 at 95 plus accrued interest. The bonds are dated January 1, 2017, and pay interest on June 30 and December 31. What is the total cash received on the issue date?

Answers

Answer:

$9,725,000  

Explanation:

The total cash received on the issue date is made of 95% of the bond's face value of $10,000,000 plus the three-month interest up to April 1 2017.

95% of face value=95%*$10,000,000=$9,500,000

three month interest accrued=$10,000,000*9%*3/12=$225,000

Total cash proceeds from bond issue=$9,500,000+$225,000

Total cash proceeds from bond issue=$9,725,000  
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