Jay Inc. estimates uncollectible accounts using the percentage-of-receivables method and expects that 3.5% of outstanding receivables will be uncollectible for 2016. The balance in Accounts Receivable is $243,000, and the Allowance for Doubtful Accounts has a credit balance of $4,300 before adjustments at year-end. The Bad Debt Expense for 2016 will be:Select one:
a. $8,505
b. $5,423
c. $4,205
d. $4,300
Answers
Answer:
c. $ 4,205
Explanation:
Computation of Estimated uncollectible accounts
Accounts Receivable balance $ 243,000
Percentage of outstanding receivable considered uncollectible 3.5 %
Uncollectible accounts balance = $ 243,000 * 3.5 % $ 8,505
Existing balance in uncollectible account $ ( 4,300)
Bad debts expense for the year $ 4,205
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Assuming the cost of direct materials used is $1,500,000, compute the total manufacturing costs using the information below. Raw materials inventory, January1 $ 30,000 Raw materials inventory, December 31 60,000 Work in process, January 1 27,000 Work in process, December 31 18,000 Finished goods, January 1 60,000 Finished goods, December 31 48,000 Raw materials purchases 1,500,000 Direct labor 690,000 Factory utilities 225,000 Indirect labor 75,000 Factory depreciation 500,000 Operating expenses 630,000.
Answers
Answer:
A.Journal entries
(1)
Dr Investment in AMC common shares
$580,000
Cr Cash $580,000
(2) No journal entry required
(3) Dr Cash $31,250
Cr Investment Revenue $31,250
(4) Dr Fair value adjustment
$35,000
Cr Net unrealised holding gains and losses- OCI $35,000
(B.) Journal entries
Dr Investment in AMC common shares $580,000
Cr Cash $580,000
(2) Investment in AMC common shares
Dr $87,500
Cr Investment Revenue $87,500
(3) Dr Cash $31,250
Cr Investment in AMC common shares $31,250
(4) No journal entry required
Explanation:
A.Journal entries
(1)
Dr Investment in AMC common shares
$580,000
Cr Cash $580,000
(2) No journal entry required
(3) Dr Cash $31,250
Cr Investment Revenue $31,250
(4) Dr Fair value adjustment
$35,000
Cr Net unrealised holding gains and losses- OCI $35,000
Working notes:
Cash Dividends = 25%*500,000*$0.25 = $31,250
Adjustment entry:
Fair value adjustment = 580,000-615,000 = $35,000
B.) Journal entries:
(1)
Dr Investment in AMC common shares $580,000
Cr Cash $580,000
(2) Investment in AMC common shares
Dr $87,500
Cr Investment Revenue $87,500
(3) Dr Cash $31,250
Cr Investment in AMC common shares $31,250
(4) No journal entry required
Working notes:
Net Income:
Investment in AMC common shares = 25%*350,000= $87,500
Cash Dividends = 25%*500,000*$0.25= $31,250
Answers
Answer:
The amount that could be justified now for the purchase of this piece of equipment is $73,747.41.
Explanation:
Note: This question is not complete as all the data in it are omitted. A complete question is therefore provided before answering the question as follows:
It is estimated that a certain piece of equipment can save $22,000 per year in labor and materials cost. The equipment has an expected life of five years and no market value. If the company must earn a 15% annual return on such investments, how much could be justified now for the purchase of this piece of equipment?
The explanation to the answer is now given as follows:
To calculate this, the formula for calculating the present value of an ordinary annuity is used as follows:
PV = P * [{1 - [1 / (1 + r)]^n} / r] …………………………………. (1)
Where;
PV = Present value of the amount to justify the equipment purchase = ?
P = yearly savings in labor and materials costs = $22,000
r = annual return rate = 15% = 0.15
n = Equipment has an expected life = 5
Substitute the values into equation (1) to have:
PV = $22,000 * [{1 - [1 / (1 + 0.15)]^5} / 0.15]
PV = $22,000 * [{1 - [1 / 1.15]^5} / 0.15]
PV = $22,000 * [{1 - 0.869565217391304^5} / 0.15]
PV = $22,000 * [{1 - 0.497176735298289} / 0.15]
PV = $22,000 * [0.502823264701711 / 0.15]
PV = $22,000 * 3.35215509801141
PV = $73,747.41
Therefore, the amount that could be justified now for the purchase of this piece of equipment is $73,747.41.
Final answer:
The question asks about the amount a company can justify spending on equipment, based on expected savings and a required rate of return. This requires understanding the concept of Present Value in financial calculations, using the formula PV = CF / (1 + r.
Explanation:
The problem is related to the concept of Present Value in finance. Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return. In this scenario, the stream of cash flows is the annual savings in labor and materials costs due to the equipment. The return rate is the annual return the company requires on such investments.
To calculate the present value, use the formula:
PV = CF / (1 + r
Where:
PV is the Present Value
CF is the annual savings (Cash flow)
r is the annual return rate
n is the expected life of the equipment.
Plug in the given values into this formula to get the amount the company could justify for the purchase of this equipment. Do remember, the rate (r) is expressed in decimal, so if the annual return is say, 5%, use 0.05 in the formula.
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Direct Labor Hours: 600,000 550,000
Manufacturing Overhead Estimated $720,000 $680,000
Answers
Answer:
Underapplied overhead= $20,000
Explanation:
Giving the following information:
Estimated Actual
Direct Labor Hours: 600,000 550,000
Manufacturing Overhead Estimated $720,000 $680,000
I assume that we need to calculate the over/under applied overhead.
First, we need to determine the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= 720,000/600,000
Predetermined manufacturing overhead rate= $1.2 per direct labor hour
Now, we apply overhead based on actual hours:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Allocated MOH= 1.2*550,000
Allocated MOH= $660,000
Finally, the under/over applied overhead:
Under/over applied overhead= real overhead - allocated overhead
Under/over applied overhead= 680,000 - 660,000
Underapplied overhead= $20,000
A.
14.4 percent
B.
10.0 percent
C.
13.6 percent
D.
11.5 percent Please show work
Answers
Answer:
C. 13.6 percent
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × risk-free rate of return + Beta × market risk premium
= 4% + 0.6 × 4% + 1.2 × 6%
= 4% + 2.4% + 7.2%
= 13.6%
The (Market rate of return - Risk-free rate of return) is also known as market risk premium
Answers
Answer:
$141 million.
Explanation:
Given: Export= $200 million.
Import= $160 million.
Foreign aid received= $80 million
Payment to foreign citizen= $15 million
Earning from abroad= $36.
Now, computing current account balance.
Total current account=
X- export
M-Import
NI-Net income
NT-Net current transfer.
Net income=
⇒ Net Income=
∴ Net Income (NI)= $21 million.
Net Transfer (NT)= $80 million.
Current account=
∴ Current account balance is $141 million.
Answers
Final answer:
Gross Domestic Product (GDP) is the total value of all final goods and services produced within a country in a given time period. To find the amount for consumption, we need to use the basic GDP equation and calculate the values for taxes minus transfer payments and investment. The subject of this question is Economics and the grade is High School.
Explanation:
The subject of this question is Economics and the grade is High School.
Gross Domestic Product (GDP) is the total value of all final goods and services produced within a country in a given time period. In this case, the GDP is $900 million.
To find the amount for consumption, we need to use the basic GDP equation:
GDP = Consumption (C) + Investment (I) + Government Purchases (G) + Net Exports (NX)
Given that the GDP is $900 million and the government purchases are $250 million, we need to find the values for taxes minus transfer payments (T) and investment (I) to calculate the consumption (C).
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