On January 1, 2021, Tropical Paradise borrows $46,000 by agreeing to a 6%, five-year note with the bank. The funds will be used to purchase a new BMW convertible for use in promoting resort properties to potential customers. Loan payments of $889.31 are due at the end of each month with the first installment due on January 31, 2021. Required:
Record the issuance of the installment note payable and the first two monthly payments.

Answers

Answer 1

Answer:

Issuance: Installment Note Payable $46,000; First two payments: Interest Expense $230.00, Installment Note Payable $659.31 each month.

On January 1, 2021, Tropical Paradise records the issuance of a 6%, five-year installment note payable with a principal amount of $46,000. This note is obtained from the bank to finance the purchase of a BMW convertible for promotional purposes related to resort properties. The terms of the loan stipulate monthly payments of $889.31, with the first installment due on January 31, 2021.

For the first two monthly payments:

1. The Interest Expense is calculated based on the outstanding balance of the loan and the interest rate. In the first month, the interest is $46,000 * 6% / 12 = $230.00.

2. The remaining amount of the monthly payment is applied to reduce the principal, recorded as a repayment of the Installment Note Payable. The principal repayment is $889.31 - $230.00 = $659.31.

This process repeats in the second month, with the interest recalculated based on the remaining balance, and the remaining amount again applied to reduce the principal. These entries reflect the gradual repayment of both interest and principal over the life of the loan.

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Answer 2

Answer:

Answer:

Journal entry

Explanation:

The Journal entry is shown below:-

1. Cash Dr, $46,000

To Notes payable $46,000

(Being issuance of notes is recorded)

2. Interest expense Dr, $230

Notes payable Dr, $659.31

To Cash $889.31

(Being payment of first installment is recorded)

3. Interest expense Dr, $226.70

Notes payable Dr, $662.61

To Cash $889.31

Working note :-

First installment interest expenses

= $46,000 × 6% × 1 month ÷ 12 month

= $230

Second installment interest expenses

= ($46,000 - $659.31) × 6% × 1 month ÷ 12 month

= $45,340.68 × 6% × 1 ÷ 12

= $226.70

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Al is a medical doctor who conducts his practice as a sole proprietor. During 2019, he received cash of $334,200 for medical services. Of the amount collected, $33,600 was for services provided in 2018. At the end of 2019, Al had accounts receivable of $91,400, all for services rendered in 2019. In addition, at the end of the year, Al received $11,000 as an advance payment from a health maintenance organization (HMO) for services to be rendered in 2020. Compute AI's gross income for 2019 using the cash basis of accounting.

Answers

Answer:

AI's gross income for 2019 using the cash basis of accounting is $345,200

Explanation:

The computation of the gross income using the cash basis of accounting is shown below:

= Cash received for medical services + advance payment received from a health maintenance organization (HMO)

= $334,200 + $11,000

= $345,200

The other items values are related to the accrual basis of accounting, So we do not consider in the computation part

Coronado Company had the following department information for the month: Total materials costs $55000 Equivalent units of materials 10000 Total conversion costs $81000 Equivalent units of conversion costs 15000 What is the total manufacturing cost per unit

Answers

Answer:

10.9 per unit

Explanation:

Total manufacturing cost per unit= Material cost per unit + Conversion cost per unit

Material Cost per Unit= Total materials cos / Equivalent units of materials

Material cost per unit = 55000 / 10000 = 5.5

Conversion cost per unit = Total conversion costs / Equivalent units of conversion costs

Conversion cost per unit = 81,000 / 15000 = 5.4

Hence, Total manufacturing cost per unit = 5.5 +5.4 = 10.9 per unit

Two investment advisers are comparing performance. One averaged a 19% return and the other a 16% return. However, the beta of the first adviser was 1.5, while that of the second was 1.a. Can you tell which adviser was a better selector of individual stocks (aside from the issue of general movements in the market)?
First Investment Advisor
Second Investment Advisor
Cannot be determined

b. If the T-bill rate were 6% and the market return during the period were 14%, which adviser would be the superior stock selector?
First Investment Advisor
Second Investment Advisor
Cannot be determined

c. What if the T-bill rate were 3% and the market return 15%?
First Investment Advisor
Second Investment Advisor
Cannot be determined

Answers

Answer:

a. Cannot be determined

b. Second Investment Advisor

c. Second Investment Advisor

Explanation:

a. Since all the information is not given in the question so we are not able to give advise. As abnormal return is calculated from subtracting the expected return from the return. But no such information is provided in the question.

b. We know that

Abnormal return = Return - expected return

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

In case of First Investment Advisor:

The return is 19%

And, the expected return equal to

= 6% + 1.5 × (14% - 6%)

= 6% + 1.5 × 8%

= 6% + 12%

= 18%

So abnormal return = 19% - 18% = 1%

In case of Second Investment Advisor:

The return is 16%

And, the expected return equal to

= 6% + 1 × (14% - 6%)

= 6% + 1 × 8%

= 6% + 8%

= 14%

So abnormal return = 16% - 18% = 2%

So, Second Investment Advisor should be accepted as it has high abnormal return then first investment Advisor

c. In case of First Investment Advisor:

The return is 19%

And, the expected return equal to

= 3% + 1.5 × (15% - 3%)

= 3% + 1.5 × 12%

= 3% + 18%

= 21%

So abnormal return = 19% - 21% = -2%

In case of Second Investment Advisor:

The return is 16%

And, the expected return equal to

= 3% + 1 × (15% - 3%)

= 3% + 1 × 12%

= 3% + 12%

= 15%

So abnormal return = 16% - 15% = 1%

So, Second Investment Advisor should be accepted as it has high abnormal return then first investment Advisor

The average lead time of a unit of product through a manufacturing station is 18 minutes. The average work in process inventory at this station has been 30 pieces. What is the production rate?a. 3.0 pieces/min
b. 0.33 pieces/min
c. 1.66 pieces/min
d. 0.83 pieces/min

Answers

Answer:

Production rate = 1.66 pieces/min (Approx)

Explanation:

Given:

Average lead time = 18 minutes

Average work in process inventory = 30 pieces

Find:

Production rate

Computation:

Production rate = Average work in process inventory/Average lead time

Production rate = 30/18

Production rate = 1.66 pieces/min (Approx)

Salisbury Company uses the perpetual inventory system and had the following inventory & sales activity for the month of May 2019: Date Activity Quantity Unit Price 5/1 Beginning Inventory 175 $11.50 5/5 Purchase 200 $10.50 5/10 Sales 300 $25 5/15 Purchase 200 $12.50 5/20 Sales 250 $28 5/25 Purchase 150 $12.50 Using the LIFO method, determine the dollar value for Ending Inventory at the end of month of May. Round to the nearest cent.

Answers

Answer:

Total ending inventory $ 2,162.5‬ LIFO perpetual method

Explanation:

At the time of each sale we determinate the last untis available for sale:

Beginning 175

Purchase 200

Slaes of 300

We use the entire 200 units purchase and 100 of the beginning inventory leaving

Beginning inventory of 75

Now, we continue:

Beginning inventory 75

5/15 purchase 200

Sales of 250 units

we use the entire 200 untis form the purchase and 50 units from beginning inventory

leaving

Beginning inventory 25 at 11.50 = 287.5

5/25 purcahse 150 units at 12.50 = 1875

Total ending inventory 2,162.5‬

Sterling Company paid $1,200 for 3 months of rent on April 1 of the current year. On April 30, Sterling Company made an adjusting entry to account for the rent that expired during the month of April. The adjusting entry contained a debit to Rent Expense in the amount of $ Blank 1 of 3 and a credit to Prepaid Rent in the amount of $ Blank 2 of 3. The remaining balance in the Prepaid Rent account after the adjustment was

Answers

Answer:

$800

Explanation:

The computation of the remaining balance in the Prepaid Rent account after the adjustment was is shown below:-

Remaining balance = Prepaid rent - Rent expense

= $1,200 - ($1,200 × (1 ÷ 3))

= $1,200 - $400

= $800

Therefore for computing the remaining balance in the Prepaid Rent account we simply applied the above formula.

Final answer:

Sterling Company should debit Rent Expense and credit Prepaid Rent by $400 for April. The remaining balance in the Prepaid Rent account after the adjustment would be $800.

Explanation:

Sterling Company has prepaid its rent for 3 months, which means that $1,200 is paid for the months of April, May, and June. To calculate the monthly rent, divide the total by the number of months, so each month costs $1,200 / 3 = $400. Therefore, at the end of April, Sterling Company should debit Rent Expense and credit Prepaid Rent by $400 to account for the rent that expired during April. After this transaction, the balance in the Prepaid Rent account would be $1,200 - $400 = $800, which is the prepaid rent for May and June that is not used yet. The adjusting entry records the expiration of prepaid expenses and increases the accuracy of the financial statements.

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