Taylor Swift Corporation purchases a patent from Salmon Company on January 1, 2020, for $54,000. The patent has a remaining legal life of 16 years. Taylor Swift feels the patent will be useful for 10 years. Prepare Taylor Swift's journal entries to record the purchase of the patent and 2020 amortization.
Assume that at January 1, 2019, the carrying amount of the patent on Taylor Swift's books is $43, 200. In January, Taylor Swift spends $24,000 successfully defending a patent suit. Taylor Swift still feels the patent will be useful until the end of 2026. Prepare the journal entries to record the $24,000 expenditure and 2019 amortization.
Answers
Answer:
Taylor Swift Corporation
a Journal Entries:
Jan. 1, 2020:
Debit Patent $54,000
Credit Cash $54,000
To record the purchase of patent purchased from Salmon Company.
December 31, 2020:
Debit Amortization Expense $5,400
Credit Accumulated Amortization - Patent $5,400
To record the amortization expense for the year.
b) Journal Entries:
January 1, 2019:
Debit Patent $24,000
Credit Cash $24,000
To record cash for defending the patent.
December 31, 2019:
Debit Amortization Expense $8,400
Credit Accumulated Amortization - Patent $8,400
To record the amortization expense for the year.
Explanation:
a) Data and Calculations:
January 1, 2020 Purchased Patent from Salmon Company = $54,000
Estimated useful life = 10 years
Annual amortization expense - $5,400 ($54,000/10)
b) Carrying amount of Patent on January 1, 2019 = $43,200
Amount spent to successfully defend the patent 24,000
Total value of patent = $67,200
Estimated useful life = 8 years (January 1, 2019 to December 31, 2026)
Annual amortization expense = $8,400 ($67,200/8)
b) The $24,000 spent for the successful defense of the patent will be capitalized. This means that the carrying balance of the Patent changes from $43,200 to $67,200. Amortization is calculated based on $67,200 on a straight-line basis for 8 years.
Journal Entry is the 1st step of the accounting cycle that records only the monetary business transactions. It uses a double-entry bookkeeping system as it provides the dual effect of each transaction in the books of accounts. These entries are used further to prepare books of accounts.
Find the attachment for the given Journal Entry.
(a) Data and calculations:
January 1, 2020 - Purchases done by Salmon Company = [tex]\[/tex] 54, 000.
Useful Life Estimated = 10 years
Amortization Expese Annually = [tex]\dfrac{54, 000}{10}[/tex] = [tex]\[/tex] 5,400.
(b) Carrying Amount Patent on Jan 1, 2019 = [tex]\[/tex] 43, 200.
Amount Spent Successfully to defend the patent = [tex]\[/tex] 24, 000.
Total Value = [tex]\[/tex] 67, 200.
Estimated Useful Life = 8 years
Amortization Expense Annually = [tex]\dfrac{67, 200}{8}[/tex] = [tex]\[/tex] 8, 400.
Hence, the [tex]\[/tex] 24, 000 will be spent for the successful defense of the patent will be capitalized. This means that the carrying balance of the Patent Changes from dollar 43, 200 to 67, 200. The amortization for straight 8-years is calculated at $67,200.
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Related Questions
6) The ________ section of the statement of cash flows includes increases and decreases in long-term assets. A) investing activities B) operating activities C) non-cash operating activities D) financing ac
Answers
Answer:
A) investing activities
Explanation:
The cash flow statement includes three sections which are Operating Activities, Investing Activities and Financing Activities. This means that non-cash operating activities is not a section in the cash flow statement.
In the section, operating activities is where the decrease or increase in the current assets and current liabilities is mentioned. Therefore, this sections does not state the long term assets affects. Financing activities refers to those funds that are affected by the change in non-current liabilities (such as bank loans) and capital.
Investing activities is the part in the cash flow statement where the impact of non-current assets (long term assets) are referred out such as acquisition and/or selling of properties, plant and equipment. Therefore, part A) investing activities is the correct answer.
Which of the following is not an objective of a structure model?
A. Designate things of interest in the business domain.
B. Describe characteristics of things of interest in the business domain.
C. Support relational database design.
D. Describe the sequence of activities.
E. All of the choices are objectives of structure models.
Answers
Answer:
E.) all of the choices are objectives of structure models
Explanation:
Structural model can be regarded as a model that gives a view about a system whereby emphasizing on the object's structure as well as their relationships, classifiers and their operation and attributes.
The objective of a structure model are;
✓ Designate things of interest in the business domain.
✓Describe characteristics of things of interest in the business domain.
✓Support relational database design.
✓Describe the sequence of activities
Identify how each of the following separate transactions 1 through 10 affects financial statements. For increases, place a "+" and the dollar amount in the column or columns. For decreases, place a "−" and the dollar amount in the column or columns. Some cells may contain both an increase (+) and a decrease (−) along with the dollar amounts. The first transaction is completed as an example.
Required:
a. For the balance sheet, identify how each transaction affects total assets, total liabilities, and total equity. For the income statement, identify how each transaction affects net income.
b. For the statement of cash flows, identify how each transaction affects cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.Transaction
1. Owner invests $900 cash in business in exchange for stock
2. Receives $700 cash for services provided
3. Pays $500 cash for employee wages
4. Incurs $100 legal costs on credit
5. Purchases $200 of supplies on credit
6. Buys equipment for $300 cash
7. Pays $200 on accounts payable
8. Provides $400 services on credit
9. Pays $50 cash for dividends
10. Collects $400 cash on accounts receivable
Answers
Answer:
1. +$900 share capital on balance sheet, Equity
2. +$700 cash in balance sheet, Current Assets
3. -$500 Expense in Income Statement
4. +$100 Legal liability in Balance Sheet, Current Liability
5. +$200 Accounts Payable in Balance Sheet, Current Liability
6. +$300 Equipment and Building in Balance Sheet, Non Current Assets
7. -$200 Accounts Payable in Balance Sheet, Current Liability
8. +$400 Accounts Receivable in Balance Sheet, Current Assets
9. -$50 Retained Earnings in Balance Sheet, Equity
10. +$400 Cash in Balance Sheet, Current Assets, and -$400 Accounts Receivable in Balance Sheet, Current Assets
Explanation:
The given transactions impacts the financial statements of the business. The effect is shown for the income statement and balance sheet. The purchase of equipment on credit does not have any impact on Income Statement since Income statement reflects only actual exchange of cash. It reflects inflow and outflow of cash.
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A company had average total assets of $3,060,000, total cash flows of $2,160,000, cash flows from operations of $415,000, and cash flows from
financing of $1,170,000. The cash flow on total assets ratio equals:
Answers
Answer:3060000:3745000
Explanation:2160000+415000+1170000 put to a ratio of the total assets 3060000
Total assets= 3060000
2160000+415000+1170000 = 3745000
3060000:3745000
Cash flow is a statistic for how much money a company earned or spent overall during a given period of time. On the statement of cash flows, a common financial statement, cash flow is often divided into cash flow from operating activities, investing activities, and financing activities.
Why cash flow is important?Positive cash flow will put your mind and heart at ease. You don't need to be concerned about how you'll fare week after week or month after month. The same goes for those of you who own businesses.
Understanding cash flow effectively is crucial because it enables you to pinpoint your sources of income and your spending habits.
With this knowledge, you may act appropriately to maintain a healthy cash flow and ultimately meet your financial objectives.
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IN the light of Nike Case, identify the following:
Nike company marketing management.
Nike is following marketing orientation rather than a product orien
Nike's competitive advantage as a market leader.. identify Nike e
opportunities through the scanning tools.
Answers
Answer:
Nike company follows brand recognition marketing strategy.
Nike focuses on market trends rather than product features.
Explanation:
Nike has great brand image among its customers. It focusses on its brand and launches new products with heavy R&D experiences. The management of Nike focus on market orientation rather than product orientation. It identifies the market trends and then customizes its product according to customers needs.
Consider the following data from the market demand and supply for apartments.
Rent Quantity Demanded Quantity Supplied
$2,000 5,000 23,000
$1,800 8,000 20,000 $1,600 11,000 17,000
$14,000 $1,400 14,000
$1,200 17,000 11,000
$1,000 20,000 8,000
A. Suppose that the average monthly rent for apartments is $1,200. At this price, how many apartments will be rented in this market?
B. Is the market currently in equilibrium, experiencing a shortage, or experiencing a surplus?
C. What do you expect to happen to the average rent?
D. What is the equilibrium rent and quantity in the market?
Answers
Answer:
11,000
Shortage
rise
$14,000 14,000
Explanation:
At the price of $1200, only 11,000 apartments would be rented. This is the quantity supplied.
Because the quantity demanded (17,000) exceeds the quantity demanded (11,000), there is a shortage. Shortage exists when quantity supplied exceeds quantity demanded. Generally, when price is below equilibrium, there is a shortage.
Due to demand exceeding supply, prices would rise until equilibrium is restored.
Equilibrium price is the price at which quantity demanded equals quantity supplied. Equilibrium quantity is the quantity where quantity demanded equals quantity supplied
Recent news articles have noted that women are "a crucial part of society and they are an untapped resource.") From your point of view, what impact will more women participation in the world economy have on the global GDP?
Answers
Answer:
The more women participate in the labor force and the global economy, the more the global GDP will grow. For too many years and in too many countries women have been forced to carry out only domestic labor, but that should end. A woman is perfectly capable to do the same tasks as any man.
The records of Penny Co. indicated that $397,250 of merchandise should be on hand on December 31. The physical inventory indicates that $394,070 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for the year ended December 31.
Chart of Accounts
CHART OF ACCOUNTS
Penny Co.
General Ledger
ASSETS
110 Cash
120 Accounts Receivable
125 Notes Receivable
130 Merchandise Inventory
131 Estimated Returns Inventory
140 Supplies
142 Prepaid Insurance
180 Land
190 Equipment
191 Accumulated Depreciation
LIABILITIES
210 Accounts Payable
216 Salaries Payable
221 Sales Tax Payable
222 Customers Refunds Payable
231 Unearned Rent
241 Notes Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary
REVENUE
410 Sales
EXPENSES
510 Cost of Merchandise Sold
521 Delivery Expense
522 Advertising Expense
523 Depreciation Expense
526 Salaries Expense
531 Rent Expense
533 Insurance Expense
534 Supplies Expense
536 Credit Card Expense
560 Miscellaneous Expense
710 Interest Expense
Answers
Answer:
Penny Co.
Adjusting Journal Entry for the inventory shrinkage for the year ended December 31:
Debit 510 Cost of Merchandise Sold $3,180
Credit 130 Merchandise Inventory $3,180
To record inventory shrinkage.
Explanation:
a) Data and Calculations:
Merchandise inventory on December 31 = $397,250
Physical inventory on December 31 = $394,070
Shrinkage = $3,180
b) Inventory Shrinkage is a cost to the business. It occurs when the physical inventory count yields an amount that is less than the amount in the accounting records. It may happen for some reasons, including theft, errors, damage, or loss. The best way to record inventory shrinkage is to debit the Cost of Goods Sold and to credit the Inventory account.
The following cost data relate to the manufacturing activities of Chang Company during the just completed year:Manufacturing overhead costs incurred:Indirect materials $ 15,000Indirect labor 130,000Property taxes, factory 8,000Utilities, factory 70,000Depreciation, factory 240,000Insurance, factory 10,000Total actual manufacturing overhead costs incurred $ 473,000Other costs incurred:Purchases of raw materials (both direct and indirect) $ 400,000Direct labor cost $ 60,000Inventories:Raw materials, beginning $ 20,000Raw materials, ending $ 30,000Work in process, beginning $ 40,000Work in process, ending $ 70,000The company uses a predetermined overhead rate of $25 per machine-hour to apply overhead cost to jobs. A total of 19,400 machine-hours were used during the year.Required:1. Compute the amount of underapplied or overapplied overhead cost for the year.2. Prepare a schedule of cost of goods manufactured for the year.
Answers
Answer:
See below
Explanation:
1.
Actual manufacturing overhead cost incurred
$473,000
Less manufacturing overhead cost applied $25 × 19,400
($485,000)
Over applied overhead
$12,000
2.
Raw materials at the beginning
$20,000
Add raw materials purchased
$400,000
Raw materials available for use
$420,000
Less raw materials at the end
($30,000)
Raw materials used in production
$390,000
Less indirect materials
($15,000)
Add direct labor
$60,000
Add manufacturing overhead applied
$485,000
Total manufacturing cost
$920,000
Add work in process inventory at the beginning
$40,000
Total work in process inventory
$960,000
Less work in process inventory at the end
($70,000)
Cost of goods manufactured.
$890,000
Financial instruments Financial instruments are assets that have a monetary value or record a monetary transaction. To coordinate the exchange of capital between borrowers and lenders, financial instruments trade in the financial markets. These financial instruments can be categorized on the basis of their issuers, maturity, risk, and other factors.
Identify the financial instruments based on the following descriptions.
a. Backed by the U.S. government, these financial instruments are short-term debt obligations with a maturity of less than one year. They are considered risk-free investments.
b. Issued by money-centered financial firms, these short- or medium-term insured debt instruments pay higher interest than a regular savings account. They are low-risk instruments and have low returns.
c. These financial instruments are investment pools that buy such short-term debt instruments as Treasury bills (T-bills), certificates of deposit (CDs), and commercial paper. They can be easily liquidated.
d. These financial instruments are contractual agreements that give one party a long-term agreement to use an asset by providing regular payments.
Which of the following instruments are traded in the capital markets? Check all that apply.
a. Common stocks
b. Corporate bonds
c. Preferred stocks
d. Certificates of deposit
e. Long-term bank loans
The process in which derivatives are used to reduce risk exposure is called :________
Answers
Answer:
1a. Backed by the U.S. government, these financial instruments are short-term debt obligations with a maturity of less than one year. They are considered risk-free investments.
Identification: U.S. Treasury Bills (T-bills)
b. Issued by money-centered financial firms, these short- or medium-term insured debt instruments pay higher interest than a regular savings account. They are low-risk instruments and have low returns.
Identification: Certificate of deposit
c. These financial instruments are investment pools that buy such short-term debt instruments as Treasury bills (T-bills), certificates of deposit (CDs), and commercial paper. They can be easily liquidated.
Identification: Money Market Mutual Fund
d. These financial instruments are contractual agreements that give one party a long-term agreement to use an asset by providing regular payments.
Identification: Lease Agreement
2. The instruments which are traded in capital markets are Common Stock, Preferred Stock, Corporate Bonds and Certificates of deposits excluding Long-term bank loans.
3. The process in which derivatives are used to reduce risk exposure is called hedging.
On January 1, 2017, Ayayai Company purchased 8% bonds having a maturity value of $200,000, for $216,849.76. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2017, and mature January 1, 2022, with interest receivable January 1 of each year. Ayayai Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.On January 1, 2017, Ayayai Company purchasedOn January 1, 2017, Ayayai Company purchased Prepare the journal entry at the date of the bond purchase. (Enter answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Answers
Answer:
1. 1/01/2017
Dr Bonds receivable 200,000
Dr Premium on bonds receivable 16,849.76
(216,849.76-200,000)
Cr Cash 216,849.76
2. Carrying amount of bonds
1/01/2017 216,849.76
1/01/2018 213,859.76
1/01/2019 210,691.35
1/01/2020 207,332.83
1/01/2021 203,772.8
1/01/2022 200,000
3. 31/12/2017
Dr Interest receivable 16,000
Cr Interest revenue 13,010
Cr Premium on bonds receivable 2,990
Explanation:
1. Preparation of the journal entry at the date of the bond purchase.
1/01/2017
Dr Bonds receivable 200,000
Dr Premium on bonds receivable 16,849.76
(216,849.76-200,000)
Cr Cash 216,849.76
2. Preparation of a bond amortization schedule.
Date Cash received Interest revenue Premium amortized Carrying amount of bonds
1/01/2017 216,849.76
1/01/2018 16,000 13,010 2,990 213,859.76
1/01/2019 16,000 12,831.59 3,168.41 210,691.35
1/01/2020 16,000 12,641.48 3,358.52 207,332.83
1/01/2021 16,000 12,439.97 3,560.03 203,772.8
1/01/2022 16,000 12,227.20 3,772.80 200,000
Workings;
1/01/2018
($200,000*8%)=16,000
($216,849.76*6%)=13,010
(16,000-13,010)=2,990
(216,849.76-2,990)=213,859.76
1/01/2019
($200,000*8%)=16,000
(213,859.76*6%)=12,831.59
(16,000-12,831.59)=3,168.41
(213,859.76-3,168.41)=210,691.35
1/01/2020
($200,000*8%)=16,000
(210,691.35*6%)=12,641.48
(16,000-12,641.48)=3,358.52
(210,691.35-3,358.52)=207,332.83
3.Preparation of the journal entry to record the interest revenue and the amortization on December 31, 2017.
31/12/2017
Dr Interest receivable 16,000
($200,000*8%)
Cr Interest revenue 13,010
($216,849.76*6%)
Cr Premium on bonds receivable 2,990
(16,000-13,010)
Outline:
Introduction
Sample Case and SWOT
Practice Case Analysis SWOT
Introduction
SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities, and Threats. Companies conduct a SWOT analysis as a critical strategic step in developing a Marketing Plan. SWOT analysis may be completed for an individual, a product or company.
Why This Matters: A SWOT Analysis helps individuals and businesses discover their own unique qualities and gain insight on what differentiates them from competitors.
Your Task: In addition to your assigned reading on SWOT Analysis, review the following Sample Case and SWOT Analysis . As you review all the materials, consider how each of the SWOT categories relate. After reviewing the Sample Case and SWOT Analysis, review the Practice Case as preparation for generating your own SWOT Analysis. Respond to each category (Strength, Weakness, Opportunity, Threat) with three to five bullet points that outline potential impacts on the success of your business.
Answers
Answer:
Strengths:
Nestle has a brand image and is top company in food industry
Strong brand recognition among customers give nestle competitive advantage.
Nestle never compromises on quality of the product.
Healthy products are strong factor for Nestle's brand image.
Multiple product choices available to customers.
Weakness:
Price fluctuation due to inflation.
Change in consumer behavior may impact sales.
High prices due to better quality products.
Opportunity:
Nestle may go for diversified products and introduce healthy beverages for its customers.
The company can introduce home based online shopping through their website.
The company can launch new products with free samples.
Threats:
New entrants in the food industry
Low price competitors
Gorilla marketing by its competitors.
Government pressure on compliance standards.
Explanation:
SWOT analysis is an important tool for business managers to analyze the company's position among its competitors. Nestle has strong brand image among its customers and customers buys the product with the brand name. Maintaining the brand image among its competitors is a huge responsibility for Nestle as a single mistake could lead to a downfall for the entire company.
cyber security systems had sales of 3,700 units at $75 per unit last year. the marketing projects of a 10 percent increase in unit volume sales this year a 40 percent increase returned merchandise will represent 8 percent of total sales what is your bet dollar sales projection for this year?
Answers
Answer:
$393,162
Explanation:
Units sold last year were 3,700
the projection for this year is an increase of 10% in volume.
projected units sales for this year will be
=110% of 3,700
=1.1 x 3,700
=4,070 units
The selling price last year was $75.
projected price this year is an increase by 40%
price for this year will be 140% of $75
=140/100 x $75
=1.4 x $75
=$105
Projected sales in dollar will be sales volume x selling price
= 4070units x $105
=$427,350
Purchase return = 8% of projected sales in dollars
=8/100 x $427,350
=34,188
Net projected sales
= $427,350 - $34,188
=$393,162
At the beginning of Year 1, a company reported a balance in common stock of $164,000 and a balance in retained earnings of $64,000. During the year, the company issued additional shares of stock for $54,000, earned net income of $44,000, and paid dividends of $11,400. In addition, the company reported balances for the following assets and liabilities on December 31.
Assets Liabilities
Cash $53,600 Account payable $9,100
Supplies 13,400 Un-earned revenue 2,400
Prepaid rent 24,000 Salaries payable 3,500
Land 200,000 Notes payable 15,000
Required:
a. Prepare a statement of stockholders' equity.
b. Prepare a balance sheet.
Answers
Answer:
Explanation:
The preparation of the statement of stockholder equity and balance sheet is presented below:
a. Statement of stockholder equity
Particulars Common stock Retained earnings Total stock equity
Beg balance $150000 $50,000 $200,000
Add: Addi shares $40,000 $40,000
Add: Net income $30,000 $30,000
Less: dividend -$10000 -$10000
Total $190,000 $70,000 $260,000
b. Balance sheet
Assets Amount
Cash $52,600
Supplies $13,400
Prepaid rent $24,000
Land $200,000
Total assets $290,000
Liabilities Amount
Account payable $9,100
Un-earned revenue $2,400
Salaries payable $3,500
Notes payable $15,000
Stockholder equity $260,000
Total liabilities & stockholder equity $290,000
PLEASE HELP DUE SOON!!Using the financial data as appropriate, calculate the following ratios year ending –
(i) Net Profit margin
(ii) Current ratio
(iii) Gearing ratio
(iv) Return on capital employed
(v) Interest Cover ratio
(vi) Gross Profit Margin
Answers
Answer:
i) 33.2%
ii) 3.7 times
iii) 7.8%
iv) 32%
v) 164 times
vi) 60.89%
Explanation:
Net profit margin = Net profit / Sales
$31,130 / $93,700 = 33.2%
Current Ratio = Current Assets / Current Liabilities
$28,430 / $7,550 = 3.7 times
Gearing Ratio = Debt / Equity
$7,550 / $96,680 = 7.8%
Return on Capital Employed = Operating Profit / Capital Employed
$57,050 - $25,730 / $96,680 = 32%
Interest Cover = Operating profit / Interest Expanse
$31,320 / $190 = 164 times
Gross Profit Margin = Gross Profit / Sales
$57,050 / $93,700 = 60.89%
What is exporting?
A. Receiving goods from another state
B. Shipping goods to another country
C. Receiving goods from another country
D. Shipping goods to another state
Answers
Consider an economy with a corn producer, some consumers, and a government. In a given year, the corn producer grows 30 million bushels of corn and the market price for corn is $5 per bushel. Of the 30 million bushels produced, 20 million are sold to consumers, 5 million are stored in inventory, and 5 million are sold to the government to feed the army. The corn producer pays $60 million in wages to consumers and $20 million in taxes to the government. Consumers pay $10 million in taxes to the government, receive $10 million in interest on the government debt, and receive $5 million in Social Security payments from the government. The profits of the corn producer are distributed to consumers.
Required:
a. Calculate GDP using (i) the product approach, (ii) the expenditure approach, and (iii) the income approach.
b. Calculate private disposable income, private sector saving, government saving, national saving, and the government deficit. Is the government budget in deficit or surplus?
Answers
Answer:
a. GDP using product approach
There are no intermediate goods inputs. Corn producer grows 30 million bushels of corn and each bushel of corn worth is $5.
GDP = 30 million * $5
GDP = $150 million
GDP using expenditure approach
i) Consumers buy 20 million bushels of corn
Consumption = 20 million * 5
Consumption (C) = $100 million
ii) Corn producer adds 5 million bushels to inventory
Investment = 5 million * $5
Investment (I) = $25 million
iii) Government buys 5 million bushels of corn
Government spending = 5 million * $5
Government spending (G) = $25 million
GDP = C + I + G
GDP = $100 + $25 + $25
GDP = $150 million
GDP using income approach
Profit income = $150 million - $60 million - $20 million
Profit income = $70 million
Government income = Taxes paid by the corn producer = $20 million
GDP = $60 million + $70 million + $20 million
GDP = $150 million
b. Private disposable income = GDP + Net factor payments + Government transfers + Interest on the government debt - Total taxes
Private disposable income = $150 million + 0 + $5 million + $10 million - $30 million
Private disposable income = $135 million
Private savings = Private disposable income - Consumption
Private savings = $135 million - $100 million
Private savings = $35 million
Government savings = Government tax income - Transfer payments - Interest on the government debt - Government spending
Government savings = $30 million - $5 million - $10 million - $5 million
Government savings = $10 million
National savings = Private savings + Government savings
National savings = $35 million + $10 million
National savings = $45 million
Government budget surplus = Government savings = $10 million
Government deficit = (-) $10 million
The correct amounts of different calculations in an economy with corn producer, consumers and government are as follows,
1. GDP as per product approach will be $150 million.
2. GDP as per the expenditure approach will be $150 million.
3 GDP as per the income approach will be calculated as $150 millions.
4. The net disposable income will be calculated as $135 million.
5. The private sector savings will be calculated as $35 million.
6. The government savings will be $10 million.
7. The National savings will be calculated as $45 million
8. And the government budget surplus is calculated as $10 million.
The calculation of financial status of an economyThe calculation of GDP can be done using the different approaches by using different formulas and putting the given values. [tex]\rm GDP\ Product\ Approach= \$30\ x\ 5\\\\\rm GDP\ Product\ Approach= \$150\ million[/tex]Using expenditure approach,[tex]\rm GDP = \$(100+25+25)\ million\\\\\rm GDP= \$150\ million[/tex]Using Income approach[tex]\rm GDP = \$(60+70+20)\ million\\\\\rm GDP = \$150\ million[/tex]Now calculating private disposable income [tex]\rm Private\ disposable\ income = GDP\ + Net\ factor\ payments\ + Government\ transfers\ + Interest\ on\ the\ government\ debt\ - Total\ taxes\\\\\rm Private\ disposable\ income = \$(150 + 0 + $5\ + $10\ - $30) \rm million\\\\\rm Private\ Disposable\ Income= \$135\ million[/tex]Now calculating Private Sector Savings[tex]\rm Private\ Savings = Private\ Disposable\ Income\ - Consumption\\\\\rm Private\ Savings = \$(135-100)\ million\\\\\rm Private\ Savings= \$35\ million[/tex]Now calculating government savings, [tex]\rm Government\ Savings\ = Government\ Tax\ Income\ - Transfer\ Payment\ - Interest\ Government\ Debt\ - Government\ Spending\\\\\rm Government\ Savings\ = \$(30 - $5 - $10 - $5) \rm million\\\\\rm Government\ Savings\ = \$10 million[/tex]Now calculating National Savings [tex]\rm National\ savings\ = Private\ savings\ + Government\ savings\\\\\National savings = \$(35 \ + $10) \rm million\\\\National\ savings = \$45\ \rm million[/tex]Now calculating government deficit\surplus [tex]\rm Government\ Budget\ Surplus = Government\ Savings\\\\\rm Government\ Budget\ Surplus = \$10 million[/tex]
Hence, the different financial calculations regarding the standings of the economy as on such date are as aforementioned, and it can be concluded that the government budget is in surplus.
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Freedom Inc. has 8 employees within Denver City and County. All of the employees worked a predominant number of hours within the city. The employees earned $9.80 per hour and worked 160 hours each during the month. The employer must remit $4.00 per month per employee who earns more than $500 per month. Additionally, employees who earn more than $500 per month must have $5.75 withheld from their pay.
What is the employee and company Occupational Privilege Tax for these employees? (Round your answers to 2 decimal places.)
Answers
Answer:
Employer = $32
Employee = $46
Explanation:
Given that :
Number of employees = 8
Earning per hour = $9.80
Hours worked per month per employer = 160
Amount employer must remit per employee who earns more than $500 = $4
Employees who earn more than $500 must have $5.75 withheld
Total earning per employee per month :
$9.80 * 160 = $1568
Earning is beyond $500
Hence,
Amount withheld from employee :
8 * $5.75 = $46
Amount remitted by employer :
8 * $4 = $32
Hence,
The occupational privilege tax for ;
Employer = $32
Employee = $46
Anthropology Corp. issued 6-year, 8% bonds with a face value of $850,000 on October 1, 2021. The bonds are dated October 1, 2021. Interest is paid semi-annually on Aptil 1 and October 1. The market rate of interest at issuance is 6%. This fiscal year end is Nocember 30th. The company uses the straight-line amortization method. What amount of interest expense is reported in the fiscal year ending in November 2021?
Answers
Answer:
8983
Explanation:
Total Premium (934609-850000) 84609
Divide: Periods total 12
Premium amortized each period 7050.75
Interest expense for Nov21 (Two months)
Cash Interest payable (850000*8%*2/12) 11333.33
Less: Premium amortized (7050.75*2/6) 2350.25
Interest expense for year ending 30.11.21 8983.08
Total Premium (934609-850000) 84609
Divide: Periods total 12
Premium amortized each period 7050.75
Interest expense for Nov21 (Two months)
Cash Interest payable (850000*8%*2/12) 11333.33
Less: Premium amortized (7050.75*2/6) 2350.25
Interest expense for year ending 30.11.21 8983.08
Answer is $8983
At the beginning of 2021, Artichoke Academy reported a balance in common stock of $154,000 and a balance in retained earnings of $54,000. During the year, the company issued additional shares of stock for $44,000, earned net income of $34,000, and paid dividends of $10,400. In addition, the company reported balances for the following assets and liabilities on December 31.
Assets Liabilities
Cash $52,600 Accounts payable $9,100
Supplies 13,400 Utilities payable 2,400
Prepaid rent 24,000 Salaries payable 3,500
Land 200,000 Notes payable 15,000
Required:
Prepare a statement of stockholders’ equity. Prepare a balance sheet.
Answers
Answer and Explanation:
The preparation of the statement of the stockholder equity and balance sheet would be shown in the attachment below:
The formulas for ending retained earning balance and stockholder equity is
Ending retained earnings = Opening retained earnings + net income - dividend paid
And, the ending equity is
= Opening equity + additional shares
The same would be shown in the attachment
Given the equity portion of a firm's balance sheets below, determine the average price per share at which new shares were sold by the firm in 2019.
2018 2019
Common Stock ($0.40 par) $620,600 $830,200
Capital Surplus $9,025,000 $13,726,000
Retained Earnings $17,400,000 $19,100,600
No answer text provided.
$12.22 per share
$9.37 per share
$12.62 per share
$8.97 per share
Answers
Answer:
$9.37 per share
Explanation:
The computation of the average price per share is shown below:
Common stock in the year 2019 $830,200
Less Common stock in the year 2018 $620,600
Rise in common stock $209,600
Divided by Par value per share $0.40
Number of new common shares sold 524,000
Now
Increase in capital surplus [$13,726,000 - $9,025,000 ] $4,701,000
Add: Increase in common stock $209,600
Total proceeds from sale of new shares $4,910,600
Divided by Number of new common shares sold 524,000
Average price per share 9.37
Optimum Weight Loss Co. offers personal weight reduction consulting services to individuals. After all the accounts have been closed on November 30, 2019, the end of the fiscal year, the balances of selected accounts from the ledger of Optimum Weight Loss Co. are as follows:
Accounts Payable $37,700
Accounts Receivable 116,750
Accumulated Depreciation - Equipment 186,400
Cash ?
Equipment 474,150
Land 300,000
Prepaid Insurance 7,200
Prepaid Rent 21,000
Salaries Payable 9,000
Cheryl Viers, Capital 710,300
Supplies 4,800
Unearned Fees 18,000
Required:
Prepare a classified balance sheet that includes the correct balance for Cash.
Answers
Answer:
Assets
Current assets
Cash $37,500
Accounts Receivable $116,750
Prepaid Insurance $7,200
Prepaid Rent $21,000
Supplies $4,800
Total current assets $187,250
Non-current assets
Equipment $474,150
Accumulated Depreciation - Equip. $186,400
Land $300,000
Total non-current assets $587,750
Total assets $775,000
Liabilities
Accounts Payable $37,700
Salaries Payable $9,000
Unearned Fees $18,000
Total liabilities $64,700
Equity
Cheryl Viers, Capital $710,300
Total equity $710,300
Total liabilities + equity $775,000
Tom Johnson Manufacturing intends to increase capacity through the addition of new equipment. Two vendors have presented proposals. The fixed costs for proposal A are $50,000, and for proposal B, $70,000. The variable cost for A is $12.00, and forB, $10.00. The revenue generated by each unit is $20.00.a) If the expected volume is 8,500 units, _______(proposal A or proposal
b) with a total profit = $______ should be chosen(enter your response as a whole number).
Answers
Answer:
For 8,500 units, proposal A provides a higher income ($3,000).
Explanation:
Giving the following information:
Proposal A:
Fixed cost= $50,000
Unitary cost= $12
Proposal B:
Fixed cost= $70,000
Unitary cost= $10
We need to choose the proposal with the higher income if 8,500 units are produced.
Proposal A:
Net income= 8,500*(20 - 12) - 50,000
Net income= $18,000
Proposal B:
Net income= 8,500*(20 - 10) - 70,000
Net income= $15,000
For 8,500 units, proposal A provides a higher income ($3,000).
The full array of tangible products offered for sale by a business represents the business's
Group of answer choices
product mix.
services.
depth.
product line.
Answers
Suppose that at the current price of a good, the quantity demanded is 44 units and the quantity supplied is 40 units. We can expect: Group of answer choices the price of the good to increase. the price of the good to decrease. the demand for the good to increase. the supply of the good to decrease.
Answers
Answer:
the price of the good to increase
Explanation:
Quantity demanded = 44 units
Quantity supplied = 40 units
Here,
Quantity demanded [tex]>[/tex] Quantity supplied
This is a situation of excess demand.
If quantity demanded is greater than quantity supplied then the supplier increases the price of the good.
So, option: the price of the good to increase is correct.
Refer to the following financial statements for Crosby Corporation:
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 20X2
Sales $ 3,880,000
Cost of goods sold 2,620,000
Gross profit $ 1,260,000
Selling and administrative expense 656,000
Depreciation expense 300,000
Operating income $ 304,000
Interest expense 87,900
Earnings before taxes $ 216,100
Taxes 155,000
Earnings after taxes $ 61,100
Preferred stock dividends 10,000
Earnings available to common stockholders $ 51,100
Shares outstanding 150,000
Earnings per share $ .34
Statement of Retained Earnings
For the Year Ended December 31, 20X2
Retained earnings, balance, January 1, 20X2 $ 855,400
Add: Earnings available to common stockholders, 20X2 51,100
Deduct: Cash dividends declared and paid in 20X2 153,000
Retained earnings, balance, December 31, 20X2 $ 753,500
Comparative Balance Sheets
For 20X1 and 20X2
Year-End
20X1 Year-End
20X2
Assets
Current assets:
Cash $ 134,000 $ 66,500
Accounts receivable (net) 526,000 531,000
Inventory 649,000 719,000
Prepaid expenses 66,800 39,100
Total current assets $ 1,375,800 $ 1,355,600
Investments (long-term securities) 99,500 82,900
Gross plant and equipment $ 2,520,000 $ 3,000,000
Less: Accumulated depreciation 1,450,000 1,750,000
Net plant and equipment 1,070,000 1,250,000
Total assets $ 2,545,300 $ 2,688,500
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 315,000 $ 558,000
Notes payable 510,000 510,000
Accrued expenses 76,900 58,000
Total current liabilities $ 901,900 $ 1,126,000
Long-term liabilities:
Bonds payable, 20X2 198,000 219,000
Total liabilities $ 1,099,900 $ 1,345,000
Stockholders’ equity:
Preferred stock, $100 par value $ 90,000 $ 90,000
Common stock, $1 par value 150,000 150,000
Capital paid in excess of par 350,000 350,000
Retained earnings 855,400 753,500
Total stockholders’ equity $ 1,445,400 $ 1,343,500
Total liabilities and stockholders’ equity $ 2,545,300 $ 2,688,500
a. Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with parentheses or a minus sign.)
b. Compute the book value per common share for both 20X1 and 20X2 for the Crosby Corporation. (Round your answers to 2 decimals places.)
c. If the market value of a share of common stock is 3.6 times book value for 20X2, what is the firm’s P/E ratio for 20X2? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Answers
Answer:
Crosby Corporation
a. Statement of Cash Flows
Operating activities:
Operating Income $304,000
Add Depreciation 300,000
Cash from operations $604,000
Changes in working capital items:
Accounts receivable (net) (5,000)
Inventory (70,000)
Prepaid expenses 27,700
Accounts payable 243,000
Notes payable 0
Accrued expenses (18,900)
Interest expense (87,900)
Taxes (155,000)
Net cash from operations $537,900
Investing Activities:
Purchase of plant (480,000)
Investments
(long-term securities) 16,600
Financing Activities:
Bonds payable 21,000
Preferred stock dividends (10,000)
Common stock dividends (153,000)
Net cash flows ($67,500)
Reconciliation with cash:
Beginning Cash Balance 134,000
Ending Cash Balance $66,500
b. The book value per common share for both 20X1 and 20X2:
= Total stockholders’ equity/Common stock outstanding
20X1 20X2
= $ 1,445,400/150,000 $ 1,343,500/150,000
= $9.636 = $8.957
= $9.64 = $8.96
Market value = $8.96 * 3.6 = $32.256
c. If the market value of a share of common stock is 3.6 times book value for 20X2, P/E ratio =
P/E ratio = Market price/EPS
= $32.256/$ .34
= 94.87 times
Explanation:
a) Data and Calculations:
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 20X2
Sales $ 3,880,000
Cost of goods sold 2,620,000
Gross profit $ 1,260,000
Selling and administrative expense 656,000
Depreciation expense 300,000 956,000
Operating income $ 304,000
Interest expense 87,900
Earnings before taxes $ 216,100
Taxes 155,000
Earnings after taxes $ 61,100
Preferred stock dividends 10,000
Earnings available to common stockholders $ 51,100
Shares outstanding 150,000
Earnings per share $ .34
Statement of Retained Earnings
For the Year Ended December 31, 20X2
Retained earnings, balance, January 1, 20X2 $ 855,400
Add: Earnings available to common stockholders, 20X2 51,100
Deduct: Cash dividends declared and paid in 20X2 153,000
Retained earnings, balance, December 31, 20X2 $ 753,500
Comparative Balance Sheets
For 20X1 and 20X2
Year-End 20X1 Year-End 20X2
Assets
Current assets:
Cash $ 134,000 $ 66,500
Accounts receivable (net) 526,000 531,000
Inventory 649,000 719,000
Prepaid expenses 66,800 39,100
Total current assets $ 1,375,800 $ 1,355,600
Investments (long-term securities) 99,500 82,900
Gross plant and equipment $ 2,520,000 $ 3,000,000
Less: Accumulated depreciation 1,450,000 1,750,000
Net plant and equipment 1,070,000 1,250,000
Total assets $ 2,545,300 $ 2,688,500
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 315,000 $ 558,000
Notes payable 510,000 510,000
Accrued expenses 76,900 58,000
Total current liabilities $ 901,900 $ 1,126,000
Long-term liabilities:
Bonds payable, 20X2 198,000 219,000
Total liabilities $ 1,099,900 $ 1,345,000
Stockholders’ equity:
Preferred stock, $100 par value $ 90,000 $ 90,000
Common stock, $1 par value 150,000 150,000
Capital paid in excess of par 350,000 350,000
Retained earnings 855,400 753,500
Total stockholders’ equity $ 1,445,400 $ 1,343,500
Total liabilities and
stockholders’ equity $ 2,545,300 $ 2,688,500
Changes in working capital items:
20X1 20X2 Changes
Accounts receivable (net) 526,000 531,000 5,000
Inventory 649,000 719,000 70,000
Prepaid expenses 66,800 39,100 -27,700
Accounts payable $ 315,000 $ 558,000 243,000
Notes payable 510,000 510,000 0
Accrued expenses 76,900 58,000 -18,900
Bonds payable, 20X2 198,000 219,000 21,000
Investments (long-term securities) 99,500 82,900 16,600
Plant and equipment 252,000 300,000 -48,000
Assume the sales mix consists of three units of Product A and one unit of Product B. If the sales mix shifts to four units of Product A and one unit of Product B, then the weighted-average contribution margin will ________. a. stay the same b. cannot be determined from this information c. decrease per unit d. increase per unit Clear my choice Question 14 Not yet answered Points out of 2.00 Flag question Question text Assume the sales mix consists of three units of Product A and one unit of Product B. If the sales mix shifts to four units of Product A and one unit of Product B, then the breakeven point will ________.
Answers
The answer is decreases per unit.
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Last Chance Company offers legal consulting advice to prison inmates. Last Chance Company prepared the end-of-period spreadsheet that follows at June 30, 2019, the end of the The annual accounting period adopted by a business.fiscal year:
Last Chance Company
End-of-Period Spreadsheet
For the Year Ended June 30, 2019
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Dr. Cr. Dr. Cr. Dr. Cr.
Cash 5,100 5,100
Accounts Receivable 22,750 (a) 3,750 26,500
Prepaid Insurance 3,600 (b) 1,300 2,300
Supplies 2,025 (c) 1,500 525
Land 80,000 80,000
Building 340,000 340,000
Accum. Depr.—Building 190,000 (d) 3,000 193,000
Equipment 140,000 140,000
Accum. Depr.—Equipment 54,450 (e) 4,550 59,000
Accounts Payable 9,750 9,750
Salaries & Wages Payable (f) 1,900 1,900
Unearned Rent 4,500 (g) 3,000 1,500
Tami Garrigan, Capital 361,300 361,300
Tami Garrigan, Drawing 20,000 20,000
Fees Earned 280,000 (a) 3,750 283,750
Rent Revenue (g) 3,000 3,000
Salaries & Wages Expense 145,100 (f) 1,900 147,000
Advertising Expense 86,800 86,800
Utilities Expense 30,000 30,000
Travel Expense 18,750 18,750
Depr. Exp.—Equipment (e) 4,550 4,550
Depr. Exp.—Building (d) 3,000 3,000
Supplies Expense (c) 1,500 1,500
Insurance Expense (b) 1,300 1,300
Misc. Expense 5,875 5,875
900,000 900,000 19,000 19,000 913,200 913,200
Required:
1. Prepare an income statement for the year ended June 30.
2. Prepare a statement of owner's equity for the year ended June 30. No additional investments were made during the year.
3. Prepare a balance sheet as of June 30.
4. On the basis of the end-of-period spreadsheet, journalize the closing entries. For a compound transaction, if a box does not require an entry, leave it blank.
5. Prepare a post-closing trial balance. If a box does not require an entry, leave it blank.
Answers
Answer:
Last Chance Company
Fees Earned $283,750
Rent Revenue 3,000
Total Revenue $286,750
Salaries & Wages Expense 147,000
Advertising Expense 86,800
Utilities Expense 30,000
Travel Expense 18,750
Depr. Exp.—Equipment 4,550
Depr. Exp.—Building 3,000
Supplies Expense 1,500
Insurance Expense 1,300
Misc. Expense 5,875
Total Expenses $298,775
Net Income (Loss) ($12,025)
2. Owner's Equity for the year ended June 30:
Tami Garrigan, Capital $361,300
Tami Garrigan, Drawing (20,000)
Net Income (Loss) ($12,025)
Capital, balance $329,275
3. Balance Sheet as of June 30:
Assets:
Cash $5,100
Accounts Receivable 26,500
Prepaid Insurance 2,300
Supplies 525 $34,425
Land 80,000
Building 340,000
Accum. Depr.(193,000) 147,000
Equipment 140,000
Accum. Depr.(59,000) 81,000 $308,000
Total assets $342,425
Liabilities + Equity
Liabilities
Accounts Payable 9,750
Salaries & Wages Payable 1,900
Unearned Rent 1,500 $13,150
Tami Garrigan, Capital $329,275
Total liabilities + Equity $342,425
4. Journal of Closing Entries:
Account Title Debit Credit
Cash 5,100
Accounts Receivable 26,500
Prepaid Insurance 2,300
Supplies 525
Land 80,000
Building 340,000
Accum. Depr.—Building 193,000
Equipment 140,000
Accum. Depr.—Equipment 59,000
Accounts Payable 9,750
Salaries & Wages Payable 1,900
Unearned Rent 1,500
Tami Garrigan, Capital 361,300
Tami Garrigan, Drawing 20,000
Account Title Debit Credit
Income Summary $286,750
Fees Earned $283,750
Rent Revenue $3,000
To close the revenue accounts to the income summary.
Account Title Debit Credit
Income Summary $298,775
Salaries & Wages Expense $147,000
Advertising Expense 86,800
Utilities Expense 30,000
Travel Expense 18,750
Depr. Exp.—Equipment 4,550
Depr. Exp.—Building 3,000
Supplies Expense 1,500
Insurance Expense 1,300
Misc. Expense 5,875
To close the expenses accounts to the income summary.
Adjusting Journal Entries:
Debit Accounts Receivable $3,750
Credit Fees Earned $3,750
To record fees on account.
Debit Insurance Expense $1,300
Credit Prepaid Insurance $1,300
To record Insurance expense.
Debit Supplies Expense $1,500
Credit Supplies $1,500
To record supplies expense.
Debit Depreciation Expense - Building $3,000
Credit Accumulated Depreciation - Building $3,000
To record depreciation expense.
Debit Depreciation Expense- Equipment $4,550
Credit Accumulated Depreciation - Equipment $4,550
To record depreciation expense.
Debit Salaries & Wages Expense $1,900
Credit Salaries & Wages Payable $1,900
To record accrued salaries and wages.
Debit Unearned Rent $3,000
Credit Rent Revenue $3,000
To record rent earned.
5. Post Closing Trial Balance:
Account Title Debit Credit
Cash $5,100
Accounts Receivable 26,500
Prepaid Insurance 2,300
Supplies 525
Land 80,000
Building 340,000
Accum. Depr. - Building $193,000
Equipment 140,000
Accum. Depr. - Equipment 59,000
Accounts Payable 9,750
Salaries & Wages Payable 1,900
Unearned Rent 1,500
Tami Garrigan, Capital 329,275
Totals $594,425 $594,425
Explanation:
a) Data and Calculations:
Last Chance Company
End-of-Period Spreadsheet
For the Year Ended June 30, 2019
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Dr. Cr. Dr. Cr. Dr. Cr.
Cash 5,100 5,100
Accounts Receivable 22,750 (a) 3,750 26,500
Prepaid Insurance 3,600 (b) 1,300 2,300
Supplies 2,025 (c) 1,500 525
Land 80,000 80,000
Building 340,000 340,000
Accum. Depr.—Building 190,000 (d) 3,000 193,000
Equipment 140,000 140,000
Accum. Depr.—Equipment 54,450 (e) 4,550 59,000
Accounts Payable 9,750 9,750
Salaries & Wages Payable (f) 1,900 1,900
Unearned Rent 4,500 (g) 3,000 1,500
Tami Garrigan, Capital 361,300 361,300
Tami Garrigan, Drawing 20,000 20,000
Fees Earned 280,000 (a) 3,750 283,750
Rent Revenue (g) 3,000 3,000
Salaries & Wages Expense 145,100 (f) 1,900 147,000
Advertising Expense 86,800 86,800
Utilities Expense 30,000 30,000
Travel Expense 18,750 18,750
Depr. Exp.—Equipment (e) 4,550 4,550
Depr. Exp.—Building (d) 3,000 3,000
Supplies Expense (c) 1,500 1,500
Insurance Expense (b) 1,300 1,300
Misc. Expense 5,875 5,875
Totals 900,000 900,000 19,000 19,000 913,200 913,200
Adjusted Trial balance
Account Title Dr. Cr.
Cash 5,100
Accounts Receivable 26,500
Prepaid Insurance 2,300
Supplies 525
Land 80,000
Building 340,000
Accum. Depr.—Building 193,000
Equipment 140,000
Accum. Depr.—Equipment 59,000
Accounts Payable 9,750
Salaries & Wages Payable 1,900
Unearned Rent 1,500
Tami Garrigan, Capital 361,300
Tami Garrigan, Drawing 20,000
Fees Earned 283,750
Rent Revenue 3,000
Salaries & Wages Expense 147,000
Advertising Expense 86,800
Utilities Expense 30,000
Travel Expense 18,750
Depr. Exp.—Equipment 4,550
Depr. Exp.—Building 3,000
Supplies Expense 1,500
Insurance Expense 1,300
Misc. Expense 5,875
Totals 913,200 913,200
A firm must choose between two investment alternatives, each costing $105,000. The first alternative generates $35,000 a year for four years. The second pays one large lump sum of $152,500 at the end of the fourth year. If the firm can raise the required funds to make the investment at an annual cost of 9 percent, what are the present values of two investment alternatives
Answers
Answer:
Present Value of first option:
= -105,000 + 35,000/ (1 + 9%) + 35,000/(1 + 9%)² + 35,000/(1 + 9%)³ + 35,000/(1 + 9%)⁴
= -105,000 + 113,390.19
= $8,390.20
Present Value of second option:
= -105,000 + 152,500/ (1 + 9%)⁴
= -105,000 + 108,034.84
= $3,034.84
Actual demand for a product for the past three months was
Three months ago 390 units
Two months ago 340 units
Last month 295 units
a. Using a simple three-month moving average, make a forecast for this month. (Round your answer to the nearest whole number.)
b. If 290 units were actually demanded this month, what would your forecast be for next month, again using a 3-month moving average? (Round your answer to the nearest whole number.)
c. Using simple exponential smoothing, what would your forecast be for this month if the exponentially smoothed forecast for three months ago was 440 units and the smoothing constant was 0.20? (Round your answer to the nearest whole number.)
Answers
Answer:
a) This month = 342
b) Next month = 308
c) This month using simple exponential smoothing = 352.
Explanation:
a) Data and Calculations:
Month Demand 3-month Moving
Average
3 months ago 390
2 months ago 340
1 month ago 295
This month 342
b)
Month Demand 3-month Moving
Average
3 months ago 390
2 months ago 340
1 month ago 295
This month 290
Next month 308
c) Simple exponential smoothing
Forecast for three months ago = 440
Smoothing constant = 0.20
Forecast for this month = 440 * (1- 0.20) = 352
d) For the simple exponential smoothing, the most recent period's forecast is multiplied by (one minus the smoothing factor).