BUSINESS COLLEGE

Paid $78,000 cash to replace a motor on equipment that extends its useful life by four years. Paid $390 cash per truck for the cost of their annual tune-ups. Paid $312 for the monthly cost of replacement filters on an air-conditioning system. Completed an addition to a building for $438,750 cash. 1. Classify the above transactions as either a revenue expenditure or a capital expenditure. 2. Prepare the journal entries to record transactions a and d.

Answers

Answer 1

Answer:

Answer: a. Capital expenditure

b. Revenue expenditure

c. Revenue expenditure

d. Capital expenditure

Explanation:

Capital expenditures are usually huge expenditure on fixed assets such as land or building and they re usually incurred to generate revenue for the business.

Revenue expenditures are usually for short term basis and are operating expenses, that us required to run the business daily.

Based on the above explanation, the answers to the following will be:

a. Paid $78,000 cash to replace a motor on equipment that extends its useful life by four years. - Capital expenditure

b. Paid $390 cash per truck for the cost of their annual tune-ups. - Revenue expenditure

c. Paid $312 for the monthly cost of replacement filters on an air-conditioning system. - Revenue expenditure.

d. Completed an addition to a building for $438,750 cash. - Capital expenditure

Check the attachment for the journal entry

Answer 2

Answer:

Final answer:

The $78,000 equipment motor replacement and the $438,750 building addition are capital expenditures. The $390 truck tune-ups and the $312 for air-filter replacements are revenue expenditures. Relevant journal entries: 'Equipment' debited and 'cash' credited $78,000, then 'Building' debited and 'cash' credited $438,750.

Explanation:

The transactions can be classified as either a revenue expenditure or a capital expenditure. 1. Paying $78,000 cash to replace a motor on equipment that extends its useful life by four years and completing an addition to a building for $438,750 cash are considered capital expenditures because they are significant investments that will benefit the company for more than one accounting period. 2. Paying $390 cash per truck for the cost of their annual tune-ups and paying $312 for the monthly cost of replacement filters on an air-conditioning system are both classified as revenue expenditures because they only benefit the current accounting period. The journal entries to record transactions A and D would be: Equipment (Debit $78,000), Cash (Credit $78,000) and Building (Debit $438,750), Cash (Credit $438,750).

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Related Questions

Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total costs and costs per unit over the relevant range of 64,000 to 104,000 units is given below: Required: 1. Complete the schedule of the company’s total costs and costs per unit as given in the relevant tab below. 2. Assume that the company produces and sells 94,000 units during the year at a selling price of $7.99 per unit. Prepare a contribution format income statement for the year.
A bond with an annual coupon rate of 7.2% sells for $988.22. What is the bond’s current yield? (Round your answer to 2 decimal places.)
The current exchange rate of dollars to euros is $18/€11.The risk free rate for dollars is r = 3%. The risk free rate for euros is re = 4%. The dollar denominated price of an option to purchase €22 for $32 in six months is $5.09. Determine the euro denominated price of a put option to sell $22 in six months using the given strike. (Hint: the strike comes from the statement €22 for $32.)
Foreign currencies are traded: A. only by banks in New York and London. B. over the counter. C. on both the NYSE and NASDAQ. D. on the Intercontinental Exchange.
Present value with periodic rates. Sam Hinds, a local dentist, is going to remodel the dental reception area and add two new workstations. He has contacted A-Dec, and the new equipment and cabinetry will cost $25 comma 000. The purchase will be financed with an interest rate of 10% loan over 6 years. What will Sam have to pay for this equipment if the loan calls for semiannual payments (2 per year) and monthly payments (12 per year)? Compare the annual cash outflows of the two payments. Why does the monthly payment plan have less total cash outflow each year? What will Sam have to pay for this equipment if the loan calls for semiannual payments (2 per year)?

The Crestar Company reported net income of $112,000 on 20,000 average outstanding common shares. Preferred dividends total $12,000. On the most recent trading day, the preferred shares sold at $50 and the common shares sold at $95. What is this company's current price-earnings ratio?

Answers

Answer:

Price earnings ratio = 19 times.

Explanation:

Price earning ratio is calculated as for the common equity, as the earnings on preference share is fixed.

Accordingly, the earnings for equity = Net income - preference dividend = $112,000 - $12,000 = $100,000

Number of shares outstanding = 20,000

Earnings per share = $100,000/20,000 = $5 per share.

Selling price of the share = $95

Thus, price earnings ratio = $95/$5 = 19 times.

This reflects that the 19 times of earnings is the price of share.

An All-Pro defensive lineman is in contract negotiations. The team has offered the following salary structure: Time Salary 0 $ 5,700,000 1 4,300,000 2 4,800,000 3 5,300,000 4 6,700,000 5 7,400,000 6 8,200,000 All salaries are to be paid in a lump sum. The player has asked you as his agent to renegotiate the terms. He wants a $9.2 million signing bonus payable today and a contract value increase of $1,200,000. He also wants an equal salary paid every three months, with the first paycheck three months from now. If the discount rate is 4.7 percent compounded daily, what is the amount of his quarterly check? Assume 365 days in a year. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)

Answers

Answer:

PTM $ 1,225,900.379

Explanation:

We will calculate the present value of the contract.

Then we will increase by 1,200,000

Next, we subtract the 9.2 bonus payable today

and distribute the rest under quarter payments:

We use present value of a lump sum

$(Nominal)/((1 + rate)^(time) ) = PV$

0 5,700,000 5,700,000

1 4,300,000 4,102,588.223

2 4,800,000 4,369,383.7

3 5,300,000 4,603,035.135

4 6,700,000 5,551,785.732

5 7,400,000 5,850,312.795

6 8,200,000 6,185,156.501

Then we add them: 36,362,262.09

We increase by 1,200,000

and subtract the 9,200,000 initial payment

28,362,262.09

this is the present value fothe quarterly payment

Next we calculate the equivalent compound rate per quarter:

$(1+(0.047)/(365) )^(365) = (1+(r_e)/(4) )^(4) \nr_e = (\sqrt[4]{1+(0.047)/(365) )^(365)} - 1)* 4$

equivalent rate: 0.002954634

Now we claculate the PTM of an annuity of 24 quearter at this rate:

$PV / (1-(1+r)^(-time) )/(rate) = PTM\n$

PV $28,362,262.09

time 24

rate 0.002954634

$28362262.0861625 * (1-(1+0.00295463425906195)^(-24) )/(0.00295463425906195) = PTM\n$

PTM $ 1,225,900.379

In the future, electrical power may come from quantum nucleonics, a form of nuclear power that produces no residual radiation. The ability to use this form of power will require equipment adaptations, but it will solve the world’s need for clean and efficient power. Companies that replace inefficient sources of power with quantum nucleonics only after they are required to by the Environmental Protection Agency are operating at a(n) _____ responsibility level. Group of answer choices

Answers

Answer: legal

Explanation:

The Environmental Protection Agency (EPA) was established in so that both human and the environmental health can be protected.

Based on the information given in the question, the companies that replace inefficient sources of power with quantum nucleonics only after they are required to by the Environmental Protection Agency are operating at a legal responsibility level. It should be noted that the law will have to be obeyed by the business at this legal responsibility level.

ECB Co. has 1.15 million shares outstanding selling at $24 per share. It plans to repurchase 97,000 shares at the market price using its cash reserves. What will be its market capitalization after the repurchase? What will be its stock price?

Answers

Answer: $24

Explanation:

From the question, ECB will have a market capitalization of:

= $24 × 1,150,000

= $27,600,000

We are further told that It plans to repurchase 97,000 shares at the market price using its cash reserves, therefore it will need to pay:

= $24 × 97,000

= $2,328,000

The new market capitalization will be:

= $27,600,000 - $2,328,000

= $25,272,000

Its share price will now be:

= $25,272,000/(1,150,000 - 97,000)

= $25,272,000/1,053,000

= $24

The stock price is still $24

Identify each of the following statements about linear programming problems as true or false, and then justify your answer.a. For minimization problems, if the objective function evaluated at a CPF solution is no larger than its value at every adjacent CPF solution, then that solution is optimal.
b. Only CPF solutions can be optimal, so the number of optimal solutions cannot exceed the number of CPF solutions.
c. If multiple optimal solutions exist, then an optimal CPF solu-tion may have an adjacent CPF solution that also in optimal.

Answers

Answer and Explanation:

a. The given statement is true as the corner point at the objective function should be feasible solution which is no longer as compared with the value for every adjacent CPF solution as compared with its optimal

b. The given statement is false as the solution can be an edge

c. The given statement is true as it shows the direct relation between the two things

Final answer:

In linear programming problems, CPF solutions can be optimal and if multiple optimal solutions exist, an optimal CPF solution may not have an adjacent CPF solution that is also optimal.

Explanation:

a. True: For minimization problems, if the objective function evaluated at a CPF solution is no larger than its value at every adjacent CPF solution, then that solution is optimal. This is because in a minimization problem, the goal is to find the solution that minimizes the objective function.

b. True: Only CPF solutions can be optimal, so the number of optimal solutions cannot exceed the number of CPF solutions. CPF stands for Corner-Point Feasible, which means solutions that lie on the corner points of the feasible region.

c. False: If multiple optimal solutions exist, an optimal CPF solution may not have an adjacent CPF solution that is also optimal. This is because adjacent CPF solutions may have different objective function values.

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KINGBIRD, INC. Income Statement For the Year Ended December 31, 2020 Sales revenue $446,700
Cost of goods sold 202,300
Gross profit 244,400
Expenses (including $16,300 interest and $20,800 income taxes) 70,800
Net income $ 173,600

Additional information:

1. Common stock outstanding January 1, 2020, was 27,200 shares, and 38,600 shares were outstanding at December 31, 2020.
2. The market price of Kingbird stock was $15 in 2020.
3. Cash dividends of $21,700 were paid, $6,500 of which were to preferred stockholders.

Compute the following measures for 2020.

(a) Earnings per share
(b) Price-earnings ratio
(c) Payout ratio