Principal components of a master budget include a.production budget b.capital expenditures budget c.sales budget d.All of these choices are correct.
The principal components of a master budget include D. All of the above.
What is a budget?A budget simply means an estimate of the income and expenditure for a particular period.
In this case, the principal components of a master budget include production budget, capital expenditures budget, and sales budget. Therefore, it's all of the above.
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Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:
Floyd $50,000
Merriam 23,000
They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership. Ramelow contributes $27,000 cash in exchange for the partnership interest. Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission?
a. Cash 27,000
Ramelow, Capital 27,000
b. Cash 27,000
Merriam, Capital 7,000
Floyd, Capital 20,000
c. Merriam, Capital 20,000
Floyd, Capital 7,000
Ramelow, Capital 27,000
d. Cash 27,000
Floyd, Capital 5,250
Merriam, Capital 1,750
Ramelow, Capital 20,000
Answer:
d. Cash 27,000
Floyd, Capital 5,250
Merriam, Capital 1,750
Ramelow, Capital 20,000
Explanation:
First of all we need to calculate the total capital after admission
Total Capital after admission = $50,000 + $23,000 + $27,000 = $100,000
Share of Ramelow = Total Capital x Partnership share = $100,000 x 1/5 = $20,000
Actual Payment made by Ramelow = $27,000
Amount of goodwill paid by Ramelow = $27,000 - $20,000 = $7,000
This goodwill will be distributed between Floyd and Merriam as per their partnership ratio
Share of Goodwill ro Flyod = $7,000 x 3/4 = $5,250
Share of Goodwill ro Merriam = $7,000 x 1/4 = $1,750
Three years ago, you bought 300 shares of Kayleigh Milk Co. for $45 a share with a margin of 50 percent. Currently, the Kayleigh stock is selling for $50 a share. Assume there are no dividends and ignore commissions. Do not round intermediate calculations. Round your answers to two decimal places.
Required:
a. Assuming that you pay cash for the stock, compute the annualized rate of return on this investment if you had paid cash.
b. Assuming that you used the maximum leverage in buying the stock, compute your rate of return with the margin purchase.
Answer:
a) Current stock price = $50
45*(1+r)^2 = 50
(1+r)^2 = 50/45
r = [tex]\sqrt{50/45}[/tex] -1
r = 0.05409255
r =5.41%
b )When the margin is 50%, 50% is paid by broker
Price paid = 50% *45 = 22.5
Price received from broker = 50% * 45 = 22.5
Current price of share = 50
Profit made per share = 50 - 45
Profit made per share = 5
Therefore 22.5*(1+r)^2 = 22.5 + 5
22.5 *(1+r)^2 = 27.5
(1+r)^2 = 27.5/22.5
1+r = [tex]\sqrt{27.5/22.5}[/tex]
r = [tex]\sqrt{27.5/22.5}[/tex] - 1
r = 1.1054 - 1
r = 0.1054
r = 10.54%
For each of the following transactions for the Sky Blue Corporation, give the accounting equation effects of the adjustments required at the end of the month on October 31.
a. Collected $2,250 rent for the period October 1 to December 31, which was credited to Unearned Revenue on October 1.
b. Paid $1,080 for a two-year insurance premium on October 1 and debited Prepaid Insurance for that amount.
c. Used a machine purchased on October 1 for $42,000. The company estimates annual depreciation of $4,200
Answer and Explanation:
Please find answer and explanation attached
Below are descriptions of internal control problems. Match the followings with each other.
Internal Control Principles:
a. Establishment of responsibility
b. Segregation of duties
c. Physical control devices
d. Documentation procedures
e. Independent internal verification
f. Human resource controls
__________ 1. The same person opens incoming mail and records the cash receipts. select a letter.
__________2. Three people handle cash sales from the same cash register drawer. select a letter.
__________3. A clothing store is experiencing a high level of inventory shortages because people try on clothing and walk out of the store without paying for the merchandise.
__________4. The person who is authorized to sign checks approves purchase orders for payment.
__________5. Some cash payments are not recorded because checks are not prenumbered.
__________6. Cash shortages are not discovered because there are no daily cash counts by supervisors.
__________7. The treasurer of the company has not taken a vacation for over 20 years.
Answer and Explanation:
The matching is as follows
1. Segregation of duties
2. Responsibility development
3. Control devices that should be displayed physically
4. Segregation of duties
5. Procedures for documentation
6. Internal vertification that to be done independently
7. Controls of human resources
By this way it should be matched
The correct pairs of internal control principles are as follows:
The same person opens incoming mail and records the cash receipts. select a letter, and The person who is authorized to sign checks approves purchase orders for payment - Segregation of duties. Thus, the correct pairs are 1-b, 2-a, 3-c, 4-b, 5-d, 6-e, 7-e.
Segregation of duties refers to the error and fraud which prevent internal control by ensuring the two parties that are responsible for the individual party for any related task.
In that condition, independent internal verification in which the cash shortages are not disclosed because they are no varied in front of the supervisors.
Therefore, the correct pairs are as follows:
1-b, 2-a, 3-c, 4-b, 5-d, 6-e, 7-e.
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You will receive 21 annual payments of $19,500. The first payment will be received 4 years from today and the interest rate is 4.8 percent. What is the value of the payments today
Answer: 936
Explanation: 4.8% of 19,500 = 936
What big announcement at the Consumer Electronics Show in Las Vegas in January 2008 shifted this format war in Sony's favor
Warner Brothers announcing that it would no longer support the HD-DVD standard was the big announcement.
What is HD-DVD standard?This is defined as a discontinued high-density optical disc format for storing data and playback of high-definition video.
At the Consumer Electronics Show in Las Vegas in January 2008, Warner Brothers which were bigger suppliers of HD DVD titles announced it will be discontinued. This therefore shifted the war in Sony's favor and supported the use of Blu-ray.
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Rover Corporation would like to transfer excess cash to its sole shareholder, Aleshia, who is also an employee. Aleshia is in the 24% tax bracket, and Rover is subject to a 21% rate. Because Aleshia's contribution to the business is substantial, Rover believes that a $145,200 bonus in the current year is reasonable compensation and should be deductible by the corporation. However, Rover is considering paying Aleshia a $145,200 dividend because the tax rate on dividends is lower than the tax rate on compensation.
Required:
a. Regarding taxes, which would benefit Aleshia the most?
b. The $135,600 dividend because after taxes she would have $__________ from the dividend and $_______ from the bonus.
c. Regarding taxes, which would benefit Rover Corporation the most?
d. Considering the two parties together, which alternative would provide the most overall tax savings? The $135,600 bonus because when the overall effect to both the corporation and the shareholder are considered the net tax savings is $_______.
a. Regarding taxes, Aleshia would have the most benefit from the dividend.
b. The $145,200 dividend because after taxes she would have $116,160 from the dividend and $110,352 from the bonus.
c. Regarding taxes, which would benefit Rover Corporation the most is the bonus compensation, which is tax-deductible.
d. The $145,200 bonus would provide the most overall tax savings for the two parties because when the overall effect to both the corporation and the shareholder is considered the net tax savings is $81,312.
What are net tax savings?Net tax savings are allowable deductions enjoyed by the corporation less the amount of taxes paid by the workers and shareholders whose incomes are taxed per the allowable deductions.
Data and Calculations:Aleshia's tax bracket = 24%
Corporation tax rate = 21%
Proposed bonus compensation = $145,200
Proposed dividend = $145,200
Maximum dividend tax rate = 20%
Dividend received by Aleshia after tax = $116,160 ($145,200 x 1 - 20%)
Bonus received by Aleshia after tax = $110,352 ($145,200 x 1 - 24%)
Benefits to corporation (tax-deductible) = $145,200
Tax on both dividend and bonus to Aleshia = $63,888 ($29,040 +$34,848)
Net benefit to both parties = $81,312 ($145,200 - $63,888)
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Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement.
1. The agreement requires equal rental payments of $66,699 beginning on December 31, 2019.
2. The fair value of the building on December 31, 2019 is $487,529.
3. The building has an estimated economic life of 12 years, a guaranteed residual value of $9,000, and an expected residual value of $6,400. Kimberly-Clark depreciates similar buildings on the straight-line method.
4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor.
5. Kimberly-Clarkâs incremental borrowing rate is 8% per year. The lessorâs implicit rate is not known by Kimberly-Clark.
Required:
a. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019, 2020, and 2021.
b. Suppose the same facts as above, except that Kimberly-Clark incurred legal fees resulting from the execution of the lease of $5,000, and received a lease incentive from Sheffield to enter the lease of $1,000. How would the initial measurement of the lease liability and right-of-use asset be affected under this situation?
c. Suppose that in addition to the $66,699 annual rental payments, Kimberly-Clark is also required to pay $5,000 for insurance costs each year on the building directly to the lessor, Sheffield Storage. How would this executory cost affect the initial measurement of the lease liability and right-of-use asset?
Answer:
a) the journal entry to record the signing of the lease agreement:
December 31, 2019, lease agreement signed
Dr Right of use 483,360
Cr Lease liability 483,360
the lease liability must record the present value of the 10 annual lease payments: $68,099 and 8% discount rate:
present value of an annuity due = payment + {payment x [1 - (1 + r)⁻⁽ⁿ⁻¹⁾]/r}
payment = 66,699r = 8% n - 1 = 10 - 1 = 9PV annuity due = 66,699 + {66,699 x [1 - (1 + 0.08)⁻⁹]/0.08} = 66,699 + 416,661 = $483,360
the journal entries to record the annual lease payments:
December 31, 2019, first annual lease payment
Dr Lease liability 66,699
Cr Cash 66,699
December 31, 2020, second annual lease payment
Dr Lease liability 33,366
Dr Interest expense 33,333
Cr Cash 66,699
interest expense = $416,661 x 8% = $33,333
December 31, 2020, depreciation expense
Dr Depreciation expense - leased building 48,336
Cr Accumulated depreciation - leased building 48,336
December 31, 2021, third annual lease payment
Dr Lease liability 36,035
Dr Interest expense 30,664
Cr Cash 66,699
interest expense = $383,295 x 8% = $30,664
December 31, 2021, depreciation expense
Dr Depreciation expense - leased building 48,336
Cr Accumulated depreciation - leased building 48,336
b) this would increase the right to use asset and lease liability by:
= -$5,000 + $1,000 = $4,000
c) this would increase the right to use asset and lease liability by:
= 5,000 + {5,000 x [1 - (1 + 0.08)⁻⁹]/0.08} = $36,234
Kohber is a Swiss-company that makes medical equipment. It recently purchased a company, which manufactures packaging for high-value drugs. Since it will run the packaging company as a separate division, it would seem that Kohber is departmentalized by: ___________
Since Kohber, is a Swiss company, that makes medical equipment, which also recently purchased a company manufacturing packaging for high-value drugs, is departmentalized by A. Function.
What is departmentalization?Departmentalization refers to the division of a company into different units.
Some primary forms of departmentalization are by:
FunctionProcessProductMarketCustomerGeographic areaMatrix.Answer Options:A. Function
B. Size
C. Geography
D. Customer product
Thus, since Kohber will run the packaging company as a separate division, it would seem that Kohber is departmentalized by A. function.
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Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.
Nash's Trading Post, LLC Balance Sheet December 31, 2022
Cash $185000 Accounts payable $195000
Accounts receivable 140000 Salaries and wages payable 25000
Inventory 150000 Mortgage payable 225000
Prepaid insurance 85000 Total liabilities $445000
Stock investments 250000
Land 250000
Buildings $300000 Common stock $335000
Less: Accumulated
depreciation (55000) 245000 Retained earnings 725000
Goodwill 200000 Total stockholders' equity $1060000
Total assets $1505000 Total liabilities and stockholders' equity $1505000
Answer:
$495,000
Explanation:
Calculation to determine the total dollar amount of assets to be classified as property, plant, and equipment
Land $250,000
Add:Buildings less accumulated depreciation $245,000
($300,000-$55,000)
Total $495,000
Therefore the total dollar amount of assets to be classified as property, plant, and equipment will be $495,000
"the difference between market price and the higher price that some individuals in the market would be willing to pay is"
Answer:
Consumer Surplus
Explanation:
Consumer surplus is the difference between the highest price a consumer is willing to pay and the actual price they do pay for the good, or the market price.
Which of the following is considered the more industrial version of hunting?
A: Trapping
B: Cornering
C: Reaping
i believe it's A. Trapping
Which statement best describes the current price for the good shown in this
graph of supply and demand schedules?
Supply and Demand Graph
Price of pizza
Demand curve Supply curve
$12.50
$10.00
$7.50
$5.00
$3.00
Current price
0
100 200 300 400 500
Quantity
O A. The current price equals the equilibrium price for the good.
B. The current price is higher than the equilibrium price for the good.
C. The current price will result in a low supply for the good
D. The current price will result in a low demand for the good.
Answer:
The Current price will result in a low supply for the good.
Explanation:
Answer above
The statement that most appropriately describes the current price for the goods displayed in the provided graph of demand and supply would be:
C). The current price will result in a low supply for the good.
The supply for a specific good depends on its price in the market. If the price is high, the firms like to supply more.While when the price of a good is low, the profit-making ability of the firms reduces significantly due to the reduction in price. As a result, the quantity supplied faces a fall. In the context of the given situation, since the price of Pizza is lower than the equilibrium price i.e. $3.00, the firms are not willing to supply more, and thus, the supply will become low.Thus, option C is the correct answer.
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which of the following is placed in the credit column of the trial balance
a.purchases
b. rent expenses
furniture
sales
Answer:
(d)rent received is the answer
Explanation:
Bagsâ (PB) is a designer ofâ high-quality backpacks and purses. Each design is made in small batches. Eachâ spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. Whenâ completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is asâ follows:
Direct materialsâpurses 319155
Direct materialsâbackpacks 454995
Direct manufacturing laborâpurses 99000
Direct manufacturing laborâbackpacks 113000
Setup 64000
Shipping 73000
Design 169000
Plant utilities and administration 221000
Total 1513150
Backpacks Purse Total
Number of bags 6175 3075 9250
Hours of production 1665 2585 4250
Number of batches 120 80 200
Number of designs 2 2 4
Required:
a. Identify the cost hierarchy level for each cost category.
b. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver.
c. Calculate the budgeted cost per unit of cost driver for each cost category.
d. Calculate the budgeted total costs and cost per unit for each product line.
e. Explain how you could use the information in requirement 4 to reduce costs.
Answer:
a. Identify the cost hierarchy level for each cost category.
Direct materials purses ⇒ Output unit-level cost
Direct materials backpacks ⇒ Output unit-level cost
Direct manufacturing labor purses ⇒ Output unit-level cost
Direct manufacturing labor backpacks ⇒ Output unit-level cost
Setup ⇒ Batch-level cost
Shipping ⇒ Batch-level cost
Design ⇒ Product-sustaining cost
Plant utilities and administration ⇒ Facility-sustaining cost
b.
Setup $64,000 ⇒ number of batches (it's a batch level cost)
Shipping $73,000 ⇒ number of batches (it's a batch level cost)
Design $169,000 ⇒ number of designs (it's logical, design costs must be allocated based on the number of designs)
Plant utilities and administration $221,000 ⇒ hour of production (it involves the whole manufacturing process)
c.
Setup $64,000 / 200 batches = $320 per batch
Shipping $73,000 / 200 batches = $365 per batch
Design $169,000 / 4 designs = $42,250 per design
Plant utilities and administration $221,000 / 4,250 production hours = $52 per production hour
backpacks purses total
Setup $38,400 $25,600 $64,000
Shipping $43,800 $29,200 $73,000
Design $84,500 $84,500 $169,000
Plant U&A $86,580 $134,420 $221,000
totals $253,280 $273,720 $527,000
d.
total production costs for backpacks = $454,995 + $113,000 + $253,280 = $821,275
production costs per unit = $821,275 / 6,175 = $133 per backpack
total production costs for purses = $319,155 + $99,000 + $273,720 = $691,875
production costs per unit = $691,875 / 3,075 = $225 per purse
e. in order to reduce setup and shipping costs, the company needs to produce in larger batches so the total number of batches decreases.
Arizona Desert Homes (ADH) constructed a new subdivision during 2020 and 2021 under contract with Cactus Development Co. Relevant data are summarized below: Contract amount $ 3,000,000 Cost: 2020 1,200,000 2021 600,000 Gross profit: 2020 800,000 2021 400,000 Contract billings: 2020 1,500,000 2021 1,500,000 ADH recognizes revenue over time with respect to these contracts. In its December 31, 2020, balance sheet, ADH would report:
For 2020, the journal entry of Arizona Desert Homes (ADH) to record revenue is as follows:
2020:
Debit Accounts Receivable $2,010,000 ($3,000,000 x 67%)
Credit Construction Revenue $2,010,000
To record the revenue for 2020 based on the percentage of completion.What is the percentage of completion method?The percentage of completion method is used to recognize revenue for a long-term contract by computing the percentage of completion for each period based on the costs to completion.
The method is used when ADH recognizes revenue over time instead of at the end of the contract (or contract completion).
Revenue is recognized over time if:
Economic benefits of the provided asset are consumed by the customer as the entity performs.The entity's performance creates or enhances an asset controlled by the customer as the asset is created or enhanced.Data and Calculations:Contract amount Cost: Gross profit: Contract billings:
2020 $3,000,000 $1,200,000 $800,000 $1,500,000
2021 600,000 400,000 1,500,000
Percentage of completion:2020 = 67% ($1,200,000/$1,800,000 x 100)
2021 = 33% ($600,000/$1,800,000 x 100)
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What is the formula used to calculate simple interest?
Would you buy a product that costs more because ethical business practices are a part of production costs? If so, how much and for what causes are you willing to spend more? If not, argue why lower priced goods make more sense.
U.S. Robotics Inc. is considering changing its capital structure to 60% debt and 40% equity. Increasing the firm’s level of debt will cause its before-tax cost of debt to increase to 10%. Use the Hamada equation to unlever and relever the beta for the new level of debt. What will the firm’s weighted average cost of capital (WACC) be if it makes this change in its capital structure? (Hint: Do not round intermediate calculations.) The optimal capital structure is the one that the WACC and the firm’s stock price. Higher debt levels the firm’s risk. Consequently, higher levels of debt cause the firm’s cost of equity to .
Answer:
Missing question at inception is also below "US Robotics has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 6%, and it's tax rate is 35%. It currently has a levered beta of 1.15. The risk free rate is 3% and the risk premium on the market is 7%"
Unlevered beta = Levered Beta / [1+(1-Tax) (D/E)
= 1.15/[1+(1-0.35)(0.3/0.7)
= 1.15/1.27857
= 0.90
Levered Beta = Unlevered beta *[1+(1-Tax)(D/E)
= 0.90 * {1+(1-0.35)(1.6/0.4)
= 0.90*1.975
= 1.78
Cost of equity = Risk free return + Levered Beta*Market risk premium
= 0.03 + 1.78 * 0.07
= 0.1546
= 15.46%
WACC = (Weight of equity * Cost of equity) + (Weight of debt*Cost of debt *(1-Tax)
= (40% * 15.46%) + 60% * 10% * (1-0.35)
= 0.06184 + 0.039
= 6.18% + 3.9
= 10.08%
The new WACC of the company is 10.08%
The optimal capital structure is the one that the WACC and the firm’s stock price. Higher debt levels the firm’s risk. Consequently, higher levels of debt cause the firm’s cost of equity to increase.
Suppose Wolverine Steel Company wishes to issue a $100,000 bond with a maturity of 6 years to raise $85,382. The market requires a yield to maturity (YTM) of 10.0% for this company's borrowing/debt. How much coupon will the company have to pay every six months
Answer:
Real question :
Suppose Wolverine Steel Company wishes to issue a $100,000 bond with a maturity of 4 years to raise $78,101. The market requires a yield to maturity (YTM) of 11.0% for this company's borrowing/debt. How much coupon will the company have to pay every six months? (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.)
Explanation:
To turn each of the payments p into a PV at the current interest rate of 11.5% per annum we divide each p by 1.0575n where n is the time until you get you payment, i.e. n= 1, 2, 3, ... 16. The total sum of thaose payments are
PV1=p (1/1.0575 + 1/1.05752 +1/1.05753 + ... + 1/1.057516) = p (1-1/1.057516)/0.575
which is a standard financial formula. Note also that at the end of 8 years you will get a lump sum payment of $100000 whose PV at the current interest rate of 11.5% per annun
PV2 = 100000/1.057516
The total present value PV1 + PV2 = $81,100 the present price of the bond. Thus you have
$81,100 = 100000/1.057516 + p (1-1/1.057516)/
0.0575
P=3835.666058
then, p=100000*i/2 and then for i.
i=7.6713321%
Why might a consumer want to know the estimated yearly energy cost for operating an appliance?
Answer:
So they know how much they have too spend on it
A bank is offering to sell 3-month certificates of deposit for $15,250. At the end of 3 months, the bank will pay $16,000 to the certificate owner. Calculate the rates and follow formatting as described below:______.
(The interest rates should be rounded to two decimal Places.
Example: 2.347 will be rounded to 2.35; no% sign should be entered, Example: 3.19 is correct but 3.19% is not correct)
1. Interest rate per compounding period is:_______.
2. The nominal annual interest rate is:________.
3. The effective annual interest rate is:________.
Answer:
i= 4.92% compounded quarterly
Nominal rate= 19.68%
Effective interest rate= 21.18%
Explanation:
Giving the following information:
PV= 15,250
FV= 16,000
n= 3 months
First, we need to calculate the interest rate for a quarter:
i= (FV - PV) / PV
i= (16,000 - 15,250) / 15,250
i= 0.0492 = 4.92% compounded quarterly
Now, we can determine the annual nominal rate:
Nominal rate= i*number of periods
Nominal rate= 0.0492*4= 0.1968= 19.68%
Finally, the effective annual interest rate:
Effective interest rate= [(1+i)^n] - 1
Effective interest rate= (1.0492^4) - 1
Effective interest rate= 0.2118 = 21.18%
Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person's status as Employed, Unemployed, "Not jn the labor force".
a. Yakov is a 48-year-old autoworker who was laid off from his job 6 months ago. He is frustrated with his inability to find a new full-time position. Last week, he took a part-time job but was given only 3 hours of work.
b. Employed Ana is a 32-year-old professional basketball player. She finished her last season as a player 3 weeks ago and is currently interviewing for a coaching position.
c. Charles is a 45-year-old accountant who has been out of work for almost a year. He became so discouraged that he gave up on his job search a couple of months ago.
d. Juanita is a 29-year-old who lost her job as an associate producer for a radio station. After spending a few weeks out of work and interviewing for several other positions, she gave up on her job search and decided to go back to grad school. She made that decision a few months ago.
Explanation:
a. yakov is employed. even though his work is part time, he is still a member of the labour force since he is in paid employment.
b. Ana is an unemployed member of the labour force since she already finished as a basketball player and is interviewing for a coaching position.
c. Charles already gave up on searching for jobs. he is no longer in the labour force.
d. Juanita is not in the labour force since she is not working and has already given up on her job search.
The Metropolitan Opera Association, Inc., was founded in 1883 and is widely regarded as one of the world's greatest opera companies. The Metropolitan's performance run from September to May, and the season may consisted of more than two dozen different operas. Many of the opera's loyal subscribers purchase tickets for the upcoming season prior to the end of the opera's fiscal year end at July 31. In its annual report, the Metropolitan recognizes a Deferred Revenue liability that is defined in their footnotes as follows. "Advance ticket sales, representing the receipt of payments for ticket sales for the net opera season, are reported as deferred revenue in the consolidated balance sheets." Ticket sales are recognized as box office revenue "on a specific performance basis."
Fiscial year ended July 31 Revenue Deferred revenue
2017 $88,514 $43,649
2016 87582 46,609
2015 90952 47801
2014 91,319 40,259
Required:
a. What revenue recognition principle(s) drive The Metropolitan Opera's deferral of advance ticket purchases?
b. Recreate the summary journal entries to recognize ticket sales revenue (box office and tours) for The Metropolitan Opera's fiscal year 2017 and advance sales for the fiscal year 2018 season. (Assume that advance ticket sales extend no further than the next year's opera season.)
c. The Metropolitan Opera's season changes every year. At the end of each fiscal year, management of the opera can observe the revenue generated by the season just concluded and also its subscribers' enthusiasm for the upcoming season. How might that information be used in managing the organization?
Answer: See explanation
Explanation:
a. Based on International Accounting Standards (IAS) 15, it should be juted that revenue can be recognized in situations whereby those who in advance have already subscribe for tickets for the Opera show view the performance.
Revenue is recognized when the customers receives his or her good or enjoy the services and if that hasn't happened, there should be a deferment of the recognition for revenue and therefore every advance ticket purchased will be deferred liability.
b. Date Particulars Debit Credit
Dec-17 Dr Ticket sales receivable $1,31,163.00
Cr Deferred revenue Liability $42,649.00
Cr Revenue from Opera Shows $88,514.00
c. When the defered revenue and the revenue from 2014 - 2017 are compared, we can see that the deferred revenue is about 46%-54% of the total revenue.
The information will be useful to The Metropolitan Opera Association Inc. in order for them to predict revenue and hence plan their budget accordingly and tailor it towards achievement of organization goals and objectives.
Hair World Inc. is a wholesaler of hair supplies. Hair World uses a perpetual inventory system. The following transactions (summarized) have been selected for analysis: a. Sold merchandise for cash (cost of merchandise $44,797). $ 83,200 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $600 ). 1,000 c. Sold merchandise (costing $8,550 ) to a customer on account with terms n/60. 18,000 d. Collected half of the balance owed by the customer in (c). 9,000 e. Granted a partial allowance relating to credit sales the customer in (c) had not yet paid. 288 Required: Compute Net Sales and Gross Profit for Hair World.
Answer:
Net Sales
Gross Revenue $101,200
Less:
Sales Discount $288
Sales Returns $1,000 $1,288
Net Sales $99,912
Gross revenue = 83,200 + 18,000 = $101,200
Gross Profit
Net Sales $99,912
Less: Cost of Goods sold ($52,747)
Gross Profit $47,165
Cost of goods sold
= 44,797 - 600 + 8,550
= $52,747
Planning to HireHuman resource planning cannot be done in a vacuum. The HR department needs to understand the company's strategic plan and be able to hire or shed jobs as necessary. As you read the following case, think about how Alicia Brooks, HR manager at Edu-Films, needs to take a balanced approach to hiring the right amount of staff for the company's next big project. In this exercise, please read the mini-case and answer the questions that follow. Edu-Films is a small design company that writes and produces videos for the elementary and high school education market. The company is in the final stages of negotiating a new contract with a U.S. publisher to create 40 videos for a new K-12 math series, and the videos need to be available by the spring of 2017. Business for Edu-Films has been slow over the past three years, and the company has kept staff levels to a minimum. Mindful of the company's flat fiscal results over the last couple of years but understanding that new hires must be ready to go once the agreement is signed, HR manager Alicia Brooks must put together a cohesive hiring plan.1). What should be Alicia's first step?A). Check with her colleagues in the industry for possible new hires.B). Get together with company execs for a planning session.C). Set goals for hiring new staff.D). Forecast labor supply and demand within the company once video work starts.E). Take out a recruitment ad in the local newspaper.2). Forecasting can use statistical or __________ methods.A). experimentalB). historicalC). scientificD). judgmentalE). experiential3). Statistical methods are excellent for capturing what type of data?A). Subjective dataB). Scientific dataC). Historical trendsD). Expert dataE). Instinctive data4). After forecasts of labor demand and supply are known, what comes next in the planning process?A). Budget reviewB). Program implementationC). Program evaluationD). Employee appraisalsE). Goal setting and strategic planning
answer:
I added each answer under the it question. The answers are in bold letters.
1. What should be Alicia’s first step?
her first step should be to Forecast labor supply and demand within the company once video work starts
. Which is option d. Which will help to meet the demand and supply,
2. Forecasting can use statistical methods or:
Judgment. option d
forecasting is done usimg qualitative methods. these methods are judgmental tools.
3. Statistical methods are excellent for capturing what type of data?
c. Historical trends
we can use data from the past in determining trends.
4. After forecasts of labor demand and supply are known, what comes next in the planning process?
e, Goal setting and strategic planning
after demand and supply has been predicted, the next focus should be on setting goals and strategic planning
The Company has prepared a sales budget of finished units for a 3-month period. The company has an inventory of units of finished goods on hand at December 31 and has a target finished goods inventory of units at the end of the succeeding quarter. It takes gallons of direct materials to make one unit of finished product. The company has inventory of gallons of direct materials at December 31 and has a target ending inventory of gallons at the end of the succeeding quarter. How many gallons of direct materials should Company purchase during the 3 months ending March 31? Select the labels and enter the amounts to calculate the direct materials (gallons) to be purchased.
Complete Question:
The Company has prepared a sales budget of 42,000 finished units for a 3-month period. The company has an inventory of 13,000 units of finished goods on hand at December 31 and has a target finished goods inventory of 15,000 units at the end of the succeeding quarter. It takes 3 gallons of direct materials to make one unit of finished product. The company has inventory of 61,000 gallons of direct materials at December 31 and has a target ending inventory of 53,000 gallons at the end of the succeeding quarter. How many gallons of direct materials should Company purchase during the 3 months ending March 31? Select the labels and enter the amounts to calculate the direct materials (gallons) to be purchased.
Answer:
The Company
Direct materials (gallons) to be purchased = 124,000 gallons.
Explanation:
Data and Calculations:
Budgeted Sales = 42,000 units
Beginning Finished unit Inventory = 13,000 units
Target Ending Inventory = 15,000 units
Production = Budgeted Sales + Ending Inventory - Beginning Inventory
= 42,000 + 15,000 - 13,000
= 44,000 units
To produce 44,000 units require 3 gallons each, i.e. a total of 132,000 (44,000 * 3) gallons
There are 61,000 gallons of materials in Beginning Inventory.
Desired Ending Inventory of materials = 53,000 gallons
Therefore, Purchases of direct materials = Required Production Materials + Ending Inventory (materials) - Beginning Inventory (materials)
= 132,000 + 53,000 - 61,000
= 124,000
If a company wants to utilize data analytics in order to identify those traits that make a prospective customer more likely to purchase, it would use an application known as ________ ________ to numerically rate its best prospective customers.
A company would purchase lead scoring application if he wants to utilize data analytics in order to identify those traits that make a prospective customer more likely to purchase.
What is lead scoring?Lead score approach is a scoring methodology that determines the worthiness of leads or potential customers. It attaches values to these potential customers based on their previous sales behavior, especially relating to their interests in the firm's products or services.
It is an effective model that helps sales and marketing departments identify which prospects are potentially most valuable to the company.
Hence, a company would purchase Lead scoring application if he wants to utilize data analytics in order to identify those traits that make a prospective customer more likely to purchase.
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On April 1, 2017 the Reba Company purchased 10%, $800,000 bonds of the Trading Up Company at par plus accrued interest. These bonds were classified as an investment in trading securities. The bonds pay interest on June 30 and December 31 each year. The entry by Reba on April 1, 2017, would include a: _________
The entry by Reba Company on April 1, 2017, would include a debit to Bonds Receivable and a credit to Cash account of $800,000, respectively.
What is the journal entry for the purchase of bonds?The journal entry for the purchase of bonds is to debit the Bonds Receivable account and credit the Cash account with the amount paid unless the bonds' prices were higher or fewer than the face value.
Data Analysis:April 1, 2017:
10%, Bonds Receivable $800,000
Cash $800,000
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